DYCOM INDUSTRIES INC, 424B1, 1997-11-06

DYCOM INDUSTRIES INC
424B1, 1997-11-06
WATER, SEWER, PIPELINE, COMM & POWER LINE CONSTRUCTION

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<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-36883

2,700,000 SHARES

LOGO

COMMON STOCK

Of the 2,700,000 shares of Common Stock, offered hereby, 1,573,378 shares
are being sold by Dycom Industries, Inc. ("Dycom" or the "Company") and
1,126,622 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). The Company will not receive any proceeds from the sale
of shares by the Selling Stockholders. See "Principal and Selling Stockholders."
The Company's Common Stock is traded on the New York Stock Exchange under the
symbol "DY". On November 4, 1997, the last reported sale price of the Common
Stock on the New York Stock Exchange was $20 5/8 per share. See "Price Range of
Common Stock and Dividend Policy."

SEE "RISK FACTORS" COMMENCING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================

<TABLE>
<CAPTION>
Price to Underwriting Proceeds to Proceeds to Selling
Public Discount(1) Company(2) Stockholders(2)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................... $20.00 $1.10 $18.90 $18.90
Total(3)..................... $54,000,000 $2,970,000 $29,736,844 $21,293,156
==============================================================================================
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting offering expenses payable by the Company, estimated at
$310,000, and by the Selling Stockholders, estimated at $190,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 405,000 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the Price to Public will total $62,100,000, the Underwriting Discount will
total $3,415,500 and the Proceeds to Company will total $37,391,344.

The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the office of NationsBanc Montgomery Securities, Inc. on or about November 10,
1997.
------------------------

NATIONSBANC MONTGOMERY SECURITIES, INC.
MORGAN KEEGAN & COMPANY, INC.
THE ROBINSON-HUMPHREY COMPANY

November 4, 1997
<PAGE> 2

[MAP OF THE UNITED STATES SHOWING
LOCATION OF DYCOM OFFICES]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the Consolidated
Financial Statements, including the Notes thereto, appearing elsewhere in this
Prospectus and incorporated by reference into this Prospectus including
information under "Risk Factors." Unless otherwise indicated, the information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.
Unless the text otherwise requires, all references to the "Company" or "Dycom"
in this Prospectus shall include Dycom Industries, Inc. and its subsidiaries.

THE COMPANY

Dycom is a leading provider of engineering, construction and maintenance
services to telecommunications providers that operate throughout the United
States. The Company's comprehensive range of telecommunications infrastructure
services include the engineering, placement and maintenance of aerial,
underground, and buried fiber-optic, coaxial and copper cable systems owned by
local and long distance communications carriers, competitive local exchange
carriers, and cable television multiple system operators. Additionally, the
Company provides similar services related to the installation of integrated
voice, data, and video local and wide area networks within office buildings and
similar structures. Dycom also performs underground utility locating and
electric utility contracting services. For the fiscal year ended July 31, 1997,
telecommunications services contributed approximately 87% of the Company's
contract revenues, underground utility locating services contributed 6%, and
electric utility contracting services contributed 7%.

Through its nine active wholly-owned subsidiaries, Dycom has established
relationships with many leading local exchange carriers, long distance
providers, competitive access providers, cable television multiple system
operators and electric utilities. Such key customers include BellSouth
Telecommunications, Inc., Comcast Cable Communications, Inc., The Southern New
England Telephone Company, GTE Corporation, U.S. West Communications, Inc., and
Florida Power & Light Company. Approximately 40% of the Company's revenues come
from multi-year master service agreements with large telecommunications
providers and electric utilities.

In July 1997, Dycom acquired Communications Construction Group, Inc.
("CCG"), a Pennsylvania-based provider of construction services to cable
television multiple system operators (the "CCG Acquisition"). CCG generated
revenues of $67.7 million in its fiscal year 1997. This transaction diversified
Dycom's telephone company customer base to include a broader mix of work for
cable television multiple system operators. The acquisition also created a
greater geographic presence for Dycom in the Mid-Atlantic, Midwest and Northeast
regions of the United States.

The telecommunications industry is undergoing rapid change due to
deregulation, increased competition and growing consumer demand for enhanced
telecommunications services, thereby creating the need for construction of
additional telecommunications infrastructure for new and existing providers. To
meet the increasing need for telecommunications infrastructure,
telecommunications providers have been increasingly outsourcing their
infrastructure engineering, construction and maintenance requirements. As the
industry becomes more competitive, outsourcing allows providers to reduce costs
and focus on their core competencies.

Dycom has a four pronged internal growth strategy: (i) increase the volume
of services to existing customers; (ii) expand the scope of services to existing
customers; (iii) broaden its customer base; and (iv) geographically expand its
service area. The competitive pressures of deregulation have prompted several
existing customers to increase the outsourcing of noncore activities which can
provide opportunities for the Company to enhance internal growth without
necessarily requiring the Company to achieve market share gains from
competitors.

In addition to internal growth, Dycom believes a variety of attractive
consolidation opportunities exist within its industry. Historically, the
telecommunications engineering, construction and maintenance services industry
has been highly fragmented, largely consisting of small, privately-held
companies with annual revenues of less than $100 million. For its acquisition
targets, the Company's key acquisition criteria are profitability in excess of
industry standards, stable and growing customer bases, proven operational and
technical competence, and experienced management that fits within Dycom's
decentralized operating structure. Dycom also seeks to use its acquisition
strategy to provide geographic as well as customer diversification.
3
<PAGE> 4

THE OFFERING

Common Stock offered by the Company... 1,573,378 Shares
Common Stock offered by Selling
Stockholders.......................... 1,126,622 Shares
Total Shares to be offered.......... 2,700,000 Shares
Common Stock outstanding after the
Offering.............................. 12,444,858 Shares(1)
Use of proceeds....................... To fund the Company's growth
strategy, including acquisitions,
working capital and capital
expenditures and for other general
corporate purposes. The Company may
also reduce certain indebtedness,
subject to reborrowing.
New York Stock Exchange Symbol........ DY

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except share and per share data)

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-----------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues.................................... $ 188,333 $ 195,260 $ 243,923
Income before income taxes........................ 8,874 11,381 19,042
Net income........................................ 5,141 7,664 11,219
Fully diluted earnings per common and common
equivalent share................................ $ 0.49 $ 0.70 $ 1.02
Shares used in computing earnings per common and
common equivalent share......................... 10,588,766 10,928,284 10,994,500
</TABLE>

<TABLE>
<CAPTION>
AT JULY 31, 1997
AT JULY 31, 1997 AS ADJUSTED(2)
----------------- -----------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 6,646 $ 36,073
Working capital.......................................... 16,219 45,646
Total assets............................................. 88,162 117,589
Long-term debt, including current portion................ 11,979 11,979
Total stockholders' equity............................... 33,752 63,179
</TABLE>

- ---------------

(1) Excludes 646,752 shares of Common Stock reserved for issuance under the
Company's 1991 Incentive Stock Option Plan, under which options to purchase
454,243 shares of Common Stock have been granted, 91,028 of which are
currently exercisable.
(2) Adjusted to reflect the sale of 1,573,378 shares of Common Stock offered by
the Company at an offering price of $20.00 per share and the anticipated
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Capitalization."
---------------

The Company's executive offices are located at 4440 PGA Boulevard, Palm
Beach Gardens, Florida 33410 and its telephone number is (561) 627-7171.
4
<PAGE> 5

RISK FACTORS

Certain statements included in this Prospectus, including, without
limitation, statements regarding the effects of recent legislation on the
telecommunications industry, the continuation of trends favoring outsourcing of
telecommunications engineering, construction and maintenance services, the
Company's objective to grow through strategic acquisitions, the Company's
internal growth strategy, the Company's ability to realize cost savings upon the
completion of acquisitions that may occur in the future, the Company's ability
to expand and diversify its customer base, trends in the Company's future
operating performance and statements as to the Company's or management's
beliefs, expectations, opinions and the like are forward-looking statements. The
factors discussed below and elsewhere in this Prospectus could cause actual
results and developments to be materially different from those expressed in or
implied by such statements. Accordingly, in addition to the other information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," elsewhere in this Prospectus and in other documents
filed by the Company with the Securities and Exchange Commission and
incorporated by reference herein, the following factors should be considered
carefully in evaluating an investment in the shares of Common Stock offered by
this Prospectus.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company has experienced and expects to continue to experience quarterly
variations in revenues, income before income taxes and net income as a result of
many factors, including the timing and volume of customers' construction and
maintenance projects, the budgetary spending patterns of customers, the
commencement of new master service agreements, the termination of existing
master service agreements, costs incurred by the Company to support growth by
acquisition or otherwise, the change in mix of customers and business,
fluctuations in insurance expense accruals due to changes in claims experience
and actuarial assumptions, the effect of the change of business between
negotiated contracts as opposed to bid contracts and the timing of additional
general and administrative expenses to support the growth of the business.
Revenues and income before income taxes in the Company's second quarter and
occasionally third quarter have in the past been, and may in the future be,
adversely affected by weather conditions and the year-end budgetary spending
patterns of its customers.

SUBSTANTIAL RELIANCE ON KEY CUSTOMERS; DEPENDENCE ON MAJOR CONTRACTS;
UNCERTAINTIES RELATING TO BACKLOG

The Company's customer base is highly concentrated, with its top three
customers in fiscal years 1995, 1996 and 1997 accounting in the aggregate for
approximately 66.8%, 72.8% and 64.0%, respectively, of the Company's total
revenues. During fiscal 1997, approximately 34.3% of the Company's total
revenues were derived from BellSouth Telecommunications, Inc., 23.3% from
Comcast Cable Communications, Inc. and 6.4% from GTE Corporation. The Company
believes that a substantial portion of its total revenues and operating income
will continue to be derived from a concentrated group of customers. The loss of
any of such customers, if not replaced, could have a material adverse effect on
the Company's business, financial condition and results of operations. The
Company derives a substantial portion of its revenues from its customers
pursuant to multi-year master service agreements. The Company is currently a
party to 15 master service agreements with its customers, including 12 such
agreements with BellSouth Telecommunications, Inc. and GTE Corporation,
collectively. Under the terms of such agreements the customer can typically
terminate the agreement on 90 days prior written notice. The termination or
renegotiation of any such contracts or the Company's failure to enter into new
master service agreements with its customers could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company's current backlog generally consists of estimates of the services to
be provided to customers under master service agreements. The master service
agreements are generally exclusive requirement contracts with certain
exceptions, including the customer's option to perform the services with its own
regularly employed personnel. Accordingly, there can be no assurance as to the
customer's requirements during a particular period or that management's
estimates of such requirements, including those used to formulate backlog, at
any point in time are accurate. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Customer
Relationships" and "-- Backlog."

5
<PAGE> 6

RISKS ASSOCIATED WITH ACQUISITIONS

An element of the Company's growth strategy is to pursue strategic
acquisitions that expand, complement or diversify the Company's business. The
Company regularly reviews various strategic acquisition opportunities and
periodically engages in discussions regarding such possible acquisitions.
Currently, the Company is not a party to any agreements, understandings, or
arrangements regarding any material acquisitions; however, as a result of the
Company's process of regularly reviewing acquisition prospects, negotiations may
occur from time to time if appropriate opportunities arise. There can be no
assurance that the Company will be able to identify additional acquisition
candidates on terms favorable to the Company or in a timely manner, enter into
acceptable agreements or close any such transactions. There can be no assurance
that the Company will be able to achieve its acquisition strategy, and any
failure to do so could have a material adverse effect on the Company's ability
to sustain growth and maintain its competitive position. In addition, the
Company believes that it will compete for attractive acquisition candidates with
other companies or investors in the telecommunications services industry.
Increased competition for such acquisition candidates could have the effect of
increasing the cost to the Company of pursuing this growth strategy or could
reduce the number of attractive candidates to be acquired. Future acquisitions
could divert management's attention from the daily operations of the Company and
otherwise require additional management, operational and financial resources.
Moreover, there is no assurance that the Company will successfully integrate
acquired companies or their management teams into its decentralized operating
structure, retain management teams of acquired companies on a long term basis,
or operate acquired companies profitably. Acquisitions may also involve a number
of other risks, including adverse short-term effects on the Company's operating
results, dependence on retaining key personnel and customers, amortization of
acquired intangible assets, and risks associated with unanticipated liabilities
or contingencies. See "Business -- Growth Strategy."

In the past, the Company has experienced difficulties in integrating and
managing certain of its acquisitions. Most recently, the Company determined to
write-off intangible assets, including goodwill, of $24.3 million in 1993 and
$1.4 million in 1994 in connection with four acquisitions, contributing to a net
loss of $31.0 million for the fiscal year ended July 31, 1993 and a net loss of
$7.5 million for the fiscal year ended July 31, 1994. Litigation with the
management team of two acquired operating subsidiaries and related shareholder
litigation and a governmental investigation also had a material adverse effect
on the Company for several years through and including the fiscal year ended
July 31, 1994. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Selected Financial Data contained in the
Company's Annual Report on Form 10-K for the year ended July 31, 1997
incorporated by reference herein. While the Company believes that it has
improved its acquisition due diligence process and its supervision of acquired
companies, no assurance can be given that the Company will not experience
difficulties in the future with its acquired companies, whether or not similar
to those discussed herein.

The Company may require additional debt or equity financing for future
acquisitions, which may not be available on terms favorable to the Company, if
at all. To the extent the Company utilizes its capital stock for all or a
portion of the consideration to be paid for future acquisitions, dilution may be
experienced by existing stockholders. If the Company is not able to use its
capital stock as consideration for acquisitions or does not have sufficient cash
resources, its growth through acquisitions could be limited. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

COMPETITION

The telecommunications services industry in which the Company operates is
highly competitive, requiring substantial resources and skilled and experienced
personnel. The Company competes with other independent contractors in most of
the markets in which it operates, several of which are large domestic companies
that have greater financial, technical and marketing resources than the Company.
In addition, there are relatively few, if any, barriers to entry into the
markets in which the Company operates and, as a result, any organization that
has adequate financial resources and access to technical expertise may become a
competitor to the Company. A significant portion of the Company's revenues are
currently derived from master service agreements and price is often an important
factor in the award of such agreements.

6
<PAGE> 7

Accordingly, the Company could be outbid by its competitors in an effort to
procure such business. There can be no assurance that the Company's competitors
will not develop the expertise, experience and resources to provide services
that achieve or that are superior in both price and quality to the Company's
services, or that the Company will be able to maintain or enhance its
competitive position. The Company may also compete for business opportunities
against the in-house service organizations of its existing or prospective
customers, including telecommunications providers, which employ personnel who
perform some of the same types of services as those provided by the Company.
There can be no assurance that existing or prospective customers of the Company
will continue to outsource telecommunications infrastructure services in the
future.

RISKS ASSOCIATED WITH THE TELECOMMUNICATIONS INDUSTRY

The Company's future success, financial condition and results of operations
will depend to a significant degree upon purchasing decisions by existing and
new telecommunications providers and other prospective customers of the Company
within the telecommunications industry. The purchasing decisions by
telecommunications providers and other telecommunications companies with respect
to services provided by the Company may be affected by a number of factors,
including without limitation, the regulatory environment within the
telecommunications industry, the public's demand for Internet access and other
interactive multimedia services, the preference toward outsourcing
telecommunications infrastructure services and their ability to raise the
capital necessary to develop telecommunications networks. Although the
regulatory environment within the telecommunications industry does not affect
the Company directly, the effects of such regulation on the Company's customers
may, in turn, adversely impact the Company's business and results of operations.
For example, although the Telecommunications Act of 1996 (the "Telecom Act")
lifted certain restrictions on telecommunications providers' ability to provide
enhanced telecommunications services, which would appear to be favorable, the
rules to implement the new statutory provisions of the Telecom Act are still
being considered by the Federal Communications Commission and other regulatory
agencies and it is uncertain at this time how the regulatory environment will
affect telecommunications providers' demand for the Company's services. The
demand for the Company's services could also be adversely affected to the extent
that the public's demand for Internet access and other interactive multimedia
services is less than currently anticipated. Additionally, the demand for the
Company's services is affected by the extent to which telecommunications
providers and other organizations determine to outsource their
telecommunications infrastructure services needs. To the extent that the current
trend favoring outsourcing of such services is reversed or reduced, the
Company's business, financial condition and results of operations may be
materially adversely affected.

RISKS ASSOCIATED WITH TECHNOLOGICAL CHANGE

The telecommunications industry is subject to rapid changes in technology.
Wireline systems used for transmission of video, voice and data face potential
displacement by various technologies, including wireless technologies. In
addition, the demand for the Company's services could be adversely affected in
the event that alternative technologies are developed and implemented that
enable telecommunications providers or other organizations to provide enhanced
telecommunications services without significantly upgrading their networks.

RISKS ASSOCIATED WITH SELF-INSURANCE

The Company is primarily self-insured, up to certain limits, for
automobile, general liability, workers' compensation and employee group health
claims. A liability for unpaid claims and associated expenses, including
incurred but not reported losses, is actuarially determined and reflected in the
Company's consolidated balance sheet as an accrued liability. The determination
of such claims and expenses and the extent of the accrued liability are
continually reviewed and updated. If the Company were to experience numerous
claims in significant amounts for which it is self-insured, or if significant
increases in insurance costs occur which are not able to be offset by increases
in contract revenues earned, the Company's results of operations and financial
condition could be materially adversely affected.

7
<PAGE> 8

DEPENDENCE ON KEY PERSONNEL

The Company is highly dependent upon the continued services and experience
of its senior management team, including Thomas R. Pledger, the Company's
Chairman and Chief Executive Officer, Steven E. Nielsen, the Company's President
and Chief Operating Officer and one or more managers of key operating
subsidiaries. The loss of the services of these individuals or other members of
the Company's senior management could have a material adverse effect on the
business, financial condition and results of operations of the Company. See
"Management."

CONTROL BY CERTAIN STOCKHOLDERS

Upon completion of the Offering, executive officers and directors of the
Company will beneficially own an aggregate of approximately 13.5% of the
outstanding shares of Common Stock (approximately 13.1% if the Underwriters'
over-allotment option is exercised in full). Accordingly, such persons, if they
were to act in concert, would likely be in a position to influence significantly
the outcome of matters requiring a stockholders' vote, including the election of
members of the Board of Directors, and thereby exercise a significant degree of
control over the affairs and management of the Company. See "Principal and
Selling Stockholders."

VOLATILITY OF STOCK PRICE

The market price of the shares of Common Stock has been, and may continue
to be, highly volatile. Numerous factors, such as announcements of fluctuations
in the Company's or competitors' operating results, market conditions for
telecommunications or telecommunications services company stocks in general,
changes in recommendations or earnings estimates by securities analysts,
announcements of new contracts or customers by the Company or its competitors,
the timing and announcement of acquisitions by the Company or its competitors
and government regulatory action, could have a significant effect on the market
price of the Common Stock. In addition, the stock market in recent years has
experienced significant price and volume fluctuations that often have been
unrelated or disproportionate to the operating performance of companies. These
broad fluctuations may adversely affect the market price of the Common Stock.
There can be no assurance that purchasers of Common Stock in this Offering will
be able to resell their Common Stock at prices equal to or greater than the
offering price hereunder.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock in the public market,
whether by purchasers in the Offering or other stockholders of the Company, or
the perception that such sales could occur, may adversely affect the market
price of the Common Stock and could impair the Company's future ability to raise
capital through an offering of its equity securities. Upon completion of this
Offering, the Company will have outstanding 12,444,858 shares of Common Stock,
plus 454,243 shares of Common Stock reserved for issuance upon exercise of
outstanding options, including 91,028 options which are currently exercisable.
Substantially all of the shares of Common Stock to be outstanding after
completion of this Offering will be either freely salable or salable subject to
certain volume and manner of sale restrictions pursuant to Rule 144 of the
Securities Act of 1933, as amended (the "Securities Act"). The Company and its
directors, executive officers and the Selling Stockholders, who will
beneficially own in the aggregate 3,495,301 shares of Common Stock, 28.1% of the
shares outstanding after the Offering have agreed, subject to certain
exceptions, not to offer, sell or otherwise dispose of any shares of Common
Stock for a period of 180 days after the closing of the Offering without the
prior written consent of NationsBanc Montgomery Securities, Inc.

8
<PAGE> 9

ANTI-TAKEOVER PROVISIONS

The Company's Articles of Incorporation (the "Articles") and By-Laws (the
"By-Laws") contain provisions which may be deemed to be "anti-takeover" in
nature in that such provisions may deter, discourage or make more difficult the
assumption of control of the Company by another corporation or person through a
tender offer, merger, proxy contest or similar transaction. The Articles permit
the Board of Directors to establish the rights, preferences, privileges and
restrictions of, and to issue, up to 1,000,000 shares of Preferred Stock without
stockholder approval. The Articles also provide for the staggered election of
directors to serve for successive three-year terms. The Company has also adopted
a Shareholder Rights Plan and executed certain change of control agreements with
key officers which may make it more difficult to effect a change in control of
the Company and replace incumbent management. In addition, the Company is
subject to certain anti-takeover provisions of the Florida Business Corporation
Act. The provisions of the Company's Articles and By-Laws, the existence of the
Shareholder Rights Plan and the change of control agreements and the application
of the anti-takeover provisions of the Florida Business Corporation Act could
have the effect of discouraging, delaying or preventing a change of control of
the Company not approved by the Board of Directors, which could adversely affect
the market price of the Company's Common Stock. See "Description of Capital
Stock -- Anti-takeover Provisions."

9
<PAGE> 10

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
by the Company, at a public offering price of $20.00 per share, are estimated to
be $29.4 million ($37.1 million if the Underwriters' over-allotment option is
exercised in full) after deduction of the underwriting discount and the
estimated offering expenses payable by the Company. The Company will not receive
any of the net proceeds of the sale of Common Stock by the Selling Stockholders.
See "Principal and Selling Stockholders."

The net proceeds of the Offering to the Company will be used to fund the
Company's growth strategy, including acquisitions, working capital and capital
expenditures and for other general corporate purposes. The Company may also
reduce certain indebtedness, subject to reborrowing. These facilities have been
used for working capital purposes and equipment purchases. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and Note 7 of the Notes to
Consolidated Financial Statements for a further description of the Company's
indebtedness, including these facilities.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is traded on the New York Stock Exchange under the symbol
"DY." The following table sets forth, for the periods indicated, the high and
low closing sale prices of the Common Stock as reported on the New York Stock
Exchange.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C> <C> <C>
FISCAL YEAR ENDED JULY 31, 1996
First Quarter............................................... $ 8 $ 6 3/8
Second Quarter.............................................. 7 1/8 5
Third Quarter............................................... 9 1/4 5 7/8
Fourth Quarter.............................................. 13 1/8 8 7/8
FISCAL YEAR ENDED JULY 31, 1997
First Quarter............................................... 14 3/8 11 1/2
Second Quarter.............................................. 12 1/4 9 1/4
Third Quarter............................................... 12 1/4 10
Fourth Quarter.............................................. 18 1/8 9 7/8
FISCAL YEAR ENDED JULY 31, 1998
First Quarter............................................... 27 7/16 16 9/16
Second Quarter (through November 4, 1997)................... 22 1/8 20 5/8
</TABLE>

On November 4, 1997, the closing sale price of the Common Stock as reported
on the New York Stock Exchange was $20 5/8 per share. The number of shareholders
of record on September 29, 1997 was approximately 660.

The Company currently intends to retain future earnings, and since 1982, no
cash dividends have been paid by the Company. The Board of Directors will
determine any future change in dividend policies based on financial conditions,
profitability, cash flow, capital requirements, and business outlook, as well as
other factors relevant at the time. The Company's credit facilities expressly
limit the payment of cash dividends to fifty percent of each fiscal year's
after-tax profits. The credit facilities' restrictions regarding the Company's
debt to equity, quick and current ratios also affect the Company's ability to
pay dividends.

10
<PAGE> 11

CAPITALIZATION

The following table sets forth the actual capitalization of the Company as
of July 31, 1997 and the capitalization as adjusted to reflect the sale of
1,573,378 shares of Common Stock offered hereby, at a public offering price of
$20.00 per share, and the application of the estimated net proceeds therefrom as
described in "Use of Proceeds." The information set forth in the table below
should be read in conjunction with the Consolidated Financial Statements of the
Company and the notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JULY 31, 1997
--------------------------
ACTUAL AS ADJUSTED
----------- ------------
<S> <C> <C>
Long-term debt, including current portion(1)................ $11,978,898 $ 11,978,898
Stockholders' equity:
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized; no shares issued and outstanding........... -- --
Common Stock, $0.33 1/3 par value; 50,000,000 shares
authorized; 10,867,877 shares issued and outstanding;
12,441,255 shares issued and outstanding as
adjusted(2)............................................ 3,622,625 4,147,085
Additional paid-in capital................................ 25,421,701 54,324,085
Retained earnings......................................... 4,707,930 4,707,930
----------- ------------
Total stockholders' equity........................ 33,752,256 63,179,100
----------- ------------
Total capitalization......................... $45,731,154 $ 75,157,998
=========== ============
</TABLE>

- ---------------

(1) Long-term debt, including current maturities of $2,966,832. For information
concerning the Company's long-term debt, see Note 7 of the Notes to
Consolidated Financial Statements.

(2) Excludes 650,355 shares of Common Stock reserved for issuance under the
Company's 1991 Incentive Stock Option Plan, under which options to purchase
266,237 shares of Common Stock have been granted, 69,933 of which were
currently exercisable.

11
<PAGE> 12

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table summarizes certain summary consolidated financial data
and is qualified by reference to and should be read in conjunction with the
Company's Consolidated Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein and with the Selected Financial Data contained in the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1997 incorporated by
reference herein. The selected consolidated financial data for each of the years
in the three-year period ended July 31, 1997 are derived from consolidated
financial statements included herein and incorporated by reference from the
Company's Annual Report on Form 10-K for the year ended July 31, 1997 and that
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is included herein and incorporated herein by reference.

The financial statements of CCG (consolidated with those of the Company)
have been audited by Nowalk & Associates, independent auditors, as stated in
their reports, which are included herein and incorporated herein by reference.

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------
(IN THOUSANDS, EXCEPT SHARE AND PER
SHARE DATA)
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
Contract revenues earned.............................. $ 186,957 $ 194,053 $ 242,958
Other, net............................................ 1,376 1,207 966
----------- ----------- -----------
Total revenues................................ 188,333 195,260 243,924
----------- ----------- -----------
Expenses:
Cost of earned revenues, excluding depreciation....... 153,284 155,770 192,412
General and administrative............................ 19,010 20,485 23,780
Depreciation and amortization......................... 7,165 7,624 8,690
----------- ----------- -----------
Total expenses................................ 179,459 183,879 224,882
----------- ----------- -----------
Income before income taxes.............................. 8,874 11,381 19,042
Provision for income taxes.............................. 3,733 3,717 7,823
----------- ----------- -----------
Net income.............................................. $ 5,141 $ 7,664 $ 11,219
=========== =========== ===========
Earnings per common and common equivalent share:
Primary............................................... $ 0.49 $ 0.71 $ 1.02
=========== =========== ===========
Fully diluted......................................... $ 0.49 $ 0.70 $ 1.02
=========== =========== ===========
Shares used in computing earnings per common and common
equivalent share:
Primary............................................... 10,588,766 10,859,819 10,948,689
=========== =========== ===========
Fully diluted......................................... 10,588,766 10,928,284 10,994,500
=========== =========== ===========
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 4,419 $ 3,928 $ 6,646
Working capital......................................... 6,631 8,223 16,219
Total assets............................................ 64,218 66,195 88,162
Long-term debt, including current portion............... 21,380 13,701 11,979
Total stockholders' equity.............................. 13,319 21,182 33,752
</TABLE>

12
<PAGE> 13

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Dycom derives most of its contract revenues earned from engineering,
construction and maintenance services to the telecommunications industry. In
addition, contract revenues earned are derived from underground utility locating
services and from maintenance and construction services provided to the electric
utility industry. The Company currently performs work for more than 25 local
exchange carriers, cable television multiple system operators, long distance
carriers, competitive access providers, and electric utilities, principally in
the Southeast, Northeast, Midwest and Mid-Atlantic United States. The Company
expects that future growth in contract revenues earned will be generated from
(i) increasing the volume of services to existing customers; (ii) expanding the
scope of services to existing customers; (iii) broadening its customer base; and
(iv) geographically expanding its service area. Growth is expected to result
from internal sources as well as through acquisitions. Other revenues include
gain on sale of surplus equipment and interest income.

In July 1997, Dycom completed the CCG Acquisition in a transaction
accounted for as a pooling of interests. CCG's revenues for fiscal 1997 were
approximately $67.7 million. CCG provides engineering, construction, and
maintenance services for cable television multiple system operators. Its
principal customer is Comcast Cable Communications, Inc., which accounted for
81.0% of CCG's revenues and 23.3% of Dycom's contract revenues in fiscal 1997.
Dycom's financial statements and all financial and operating data derived
therefrom have been combined for all periods presented herein to include the
financial condition and results of operations of CCG.

Dycom provides services to its customers pursuant to master service
agreements and contracts for particular projects. Under master service
agreements, Dycom agrees to provide, for a period of several years, all
specified service requirements to its customer within a given geographical
territory. The customer, with certain exceptions, agrees to purchase such
requirements from Dycom. Materials to be used in these jobs are generally
provided by the customer. Master service agreements generally provide that Dycom
will furnish a specified unit of service for a specified unit price (e.g., fiber
optic cable will be installed underground for a specified rate of dollars per
foot). The Company recognizes revenue under master service agreements on the
percentage of completion basis. Dycom is currently party to 15 master service
agreements, which accounted for approximately 40% of the Company's fiscal 1997
revenues. Master service agreements are typically bid initially and may be
extended by negotiation. The remainder of Dycom's services are provided pursuant
to contracts for particular jobs, which are generally from three to four months
in duration from the contract date, depending upon the size of the project.
These contracts may be either bid or negotiated.

Cost of earned revenues includes all direct costs of providing services
under the Company's contracts, other than depreciation on fixed assets owned by
the Company or utilized by the Company under capital leases, which are included
in depreciation and amortization expense. Cost of earned revenues includes all
costs of construction personnel, subcontractor costs, all costs associated with
operation of equipment, excluding depreciation, materials not supplied by the
customer and insurance. Because the Company is primarily self-insured for
automobile, general liability, workers' compensation, and employee group health
claims, a change in experience or actuarial assumptions that did not affect the
rate of claims payments could nonetheless materially adversely affect results of
operations in a particular period. General and administrative costs include all
costs of holding company and subsidiary management personnel, rent, utilities,
travel and centralized costs such as insurance administration, interest on debt,
professional costs and certain clerical and administrative overhead. The
Company's management personnel, including subsidiary management, undertake all
sales and marketing functions as part of their management responsibilities, and,
accordingly, the Company does not incur material selling expenses.

Dycom, founded in 1969, witnessed significant growth during the 1980's as
the result of increasing competitive growth in the long distance telephone
market and the needs of the long distance carriers to replace their copper
cabling with fiber optic cable. Through 1990, Dycom acquired nine operating
subsidiaries. As long distance carriers completed most of their long haul lines
in the late 1980's, the Company shifted its focus to the local exchange carrier
market. During the early 1990's, Dycom's results of operations were materially

13
<PAGE> 14

adversely affected by a number of internal developments, including (i)
adjustments taken to insurance reserves in 1991, (ii) write-offs of intangible
assets, including goodwill, of $24.3 million and $1.4 million in 1993 and 1994,
respectively, incurred in connection with four acquisitions, which contributed
to net losses in those years, and (iii) significant costs and distraction of
management attention associated with a range of litigation and a governmental
investigation, including shareholder litigation and protracted litigation with a
former officer involved in a takeover effort. See Selected Financial Data for
the five years ended July 31, 1997 in the Company's Annual Report on Form 10-K
for the year ended July 31, 1997 incorporated by reference herein. All of these
matters were concluded in or before the 1995 fiscal year. Management of the
Company does not believe that any of the events or circumstances it faced in the
early 1990's are indicative of the manner in which the Company currently
operates or the Company's future prospects.

RESULTS OF OPERATIONS

The following table sets forth, as a percentage of contract revenues
earned, certain items in the Company's statement of operations for the periods
indicated:

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Revenues:
Contract revenues earned.................................. 100.0% 100.0% 100.0%
Other, net................................................ 0.7 0.6 0.4
------ ------ ------
Total revenues.................................... 100.7 100.6 100.4
Expenses:
Cost of earned revenue, excluding depreciation............ 82.0 80.3 79.2
General and administrative................................ 10.2 10.6 9.8
Depreciation and amortization............................. 3.8 3.9 3.6
------ ------ ------
Total expenses.................................... 96.0 94.8 92.6
------ ------ ------
Income before income taxes.................................. 4.7 5.8 7.8
Provision for income taxes.................................. 2.0 1.9 3.2
------ ------ ------
Net income.................................................. 2.7% 3.9% 4.6%
====== ====== ======
</TABLE>

YEAR ENDED JULY 31, 1997 COMPARED TO YEAR ENDED JULY 31, 1996

Revenues. Contract revenues increased $48.9 million, or 25.2%, to $243.0
million in fiscal 1997 from $194.1 million in fiscal 1996. Of this increase,
$40.7 million was attributable to the telecommunications services group, $6.1
million was attributable to the electric services group and $2.1 million was
attributable to the underground utility locating services group, reflecting an
increased overall market demand for the Company's services. During fiscal 1997,
the Company recognized $210.4 million of contract revenues from the
telecommunications services group as compared to $169.7 million in fiscal 1996.
The increase in the Company's telecommunications services group reflects an
increased volume of projects and activity in fiscal 1997 associated with the
cable television services group, which increased by $19.4 million to $70.6
million in fiscal 1997 from $51.2 million in fiscal 1996, the design and
installation of broadband networks, telephone engineering services and premise
wiring services, which was partially offset by a slight decline in contract
revenues from services performed under master service agreements. Contract
revenues from master service agreements, however, continue to be a significant
source of the Company's revenues, representing approximately 40% of total
contract revenues in fiscal 1997 as compared to 47.2% in fiscal 1996. The
Company recognized contract revenues of $16.8 million from electric utilities
services in fiscal 1997 as compared to $10.7 million in fiscal 1996, an increase
of 57.0%. The Company recognized contract revenues of $15.8 million from
underground utility locating services in fiscal 1997 as compared to $13.7
million in fiscal 1996, an increase of 15.2%.

Cost of Earned Revenues. Cost of earned revenues increased $36.6 million
to $192.4 million in fiscal 1997 from $155.8 million in fiscal 1996, but
decreased as a percentage of contract revenues to 79.2%

14
<PAGE> 15

from 80.3%. Direct labor, subcontractor and materials costs declined slightly as
a percentage of contract revenues as a result of improved productivity in the
labor force and the utilization of more modern equipment. Additionally,
insurance costs declined by approximately $1.6 million as a result of fewer
claims arising in fiscal 1997.

General and Administrative Expenses. General and administrative expenses
increased $3.3 million to $23.8 million in fiscal 1997 from $20.5 million in
fiscal 1996, but decreased as a percentage of contract revenues to 9.8% from
10.6%. The increase in general and administrative expenses was primarily
attributable to a $2.1 million increase in administrative salaries, bonuses,
employee benefits and payroll taxes and an increase of $300,000 in the provision
for doubtful accounts. The Company also incurred professional and related
expenses associated with the CCG Acquisition of $400,000 in fiscal 1997.

Depreciation and Amortization. Depreciation and amortization expense
increased $1.1 million to $8.7 million in fiscal 1997 from $7.6 million in
fiscal 1996, but decreased as a percentage of contract revenues to 3.6% from
3.9%. The increase in amount reflects the depreciation of additional capital
expenditures incurred in the ordinary course of business.

Income Taxes. The provision for income taxes was $7.8 million in fiscal
1997 as compared to $3.7 million in fiscal 1996. The provision for income taxes
for fiscal 1996 reflects a reduction of $1.1 million in a valuation allowance
relative to certain deferred tax assets. The Company's effective tax rate was
41.1% in fiscal 1997 as compared to 32.7% in fiscal 1996. The effective tax rate
differs from the statutory tax rate due to state income taxes, the amortization
of intangible assets that do not provide a tax benefit, other non-deductible
expenses for tax purposes and, in fiscal 1996, the reduction in a valuation
allowance relative to certain deferred tax assets.

Net Income. Net income increased to $11.2 million in fiscal 1997 from $7.7
million in fiscal 1996, a 46.4% increase.

YEAR ENDED JULY 31, 1996 COMPARED TO YEAR ENDED JULY 31, 1995

Revenues. Contract revenues increased $7.1 million, or 3.8%, to $194.1
million in fiscal 1996 from $187.0 million in fiscal 1995. For fiscal 1996, the
telecommunications services group contract revenues increased by $8.8 million,
which was offset by declines in contract revenues from the underground utility
locating services and the electrical services groups of $1.1 million and
$600,000, respectively. During fiscal 1996, the Company recognized $169.7
million of contract revenues from the telecommunications services group as
compared to $160.9 million in fiscal 1995. The telecommunications services group
experienced an increased volume of projects and activity in fiscal 1996
associated with the design and installation of broadband networks, telephony
engineering and design services and premise wiring services, which was partially
offset by a decline in contract revenues from services performed under master
service agreements. Contract revenues from master service agreements represented
47.2% of contract revenues in fiscal 1996 as compared to 52.1% in fiscal 1995.
The Company recognized contract revenues from electrical services of $10.7
million in fiscal 1996 as compared to $11.3 million in fiscal 1995, a decrease
of 5.3%, as a result of lower volume from bid contracts, partially offset by
improved volume and pricing under certain existing contracts. The Company
recognized contract revenues from underground utility locating services of $13.7
million in fiscal 1996 as compared to $14.8 million in fiscal 1995, a decrease
of 7.4%, as a result of the loss of a certain underground utility locating
contract during the competitive bid process, partially offset by the realization
of certain new underground utility locating business.

Cost of Earned Revenues. Cost of earned revenues increased $2.5 million to
$155.8 million in fiscal 1996 from $153.3 million in fiscal 1995, but decreased
as a percentage of contract revenues to 80.3% from 82.0%. Direct labor,
subcontractor and materials costs declined slightly as a percentage of contract
revenues as a result of improved productivity in the labor force and the
utilization of more modern equipment on projects. Additionally, insurance costs
increased by approximately $900,000 as a result of more claims arising in fiscal
1996.

General and Administrative Expenses. General and administrative expenses
increased $1.5 million to $20.5 million in fiscal 1996 from $19.0 million in
fiscal 1995, and increased as a percentage of contract revenues to 10.6% from
10.2%. The increase in general and administrative expenses was primarily
attributable

15
<PAGE> 16

to a $1.1 million increase in administrative salaries, wages and related payroll
taxes and an increase of $300,000 in professional expenses.

Depreciation and Amortization. Depreciation and amortization expense
increased $459,000 to $7.6 million in fiscal 1996 from $7.2 million in fiscal
1995, and increased slightly as a percentage of contract revenues to 3.9% from
3.8%. The increase reflected the depreciation of additional capital expenditures
incurred in the ordinary course of business.

Income Taxes. The provision for income taxes was $3.7 million in fiscal
1996, as well as in fiscal 1995. The provision for income taxes for 1996
reflects a reduction of $1.1 million in a valuation allowance relative to
certain deferred tax assets. The Company's effective tax rate was 32.7% in
fiscal 1996 as compared to 42.1% in fiscal 1995. The effective tax rate differed
from the statutory tax rate due to state income taxes, the amortization of
intangible assets that do not provide a tax benefit, other non-deductible
expenses for tax purposes and, in fiscal 1996, the reduction in a valuation
allowance relative to certain deferred tax assets.

Net Income. Net income increased to $7.7 million in fiscal 1996 from $5.1
million in fiscal 1995, a 49.1% increase.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth historical financial data for the fiscal
quarters of 1996 and 1997. This quarterly information is unaudited, but has been
prepared on a basis consistent with the Company's audited financial statements
presented elsewhere herein and, in the Company's opinion, includes all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the information for the quarters presented. The operating
results for any quarter are not necessarily indicative of the results for any
future period.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------
OCT. 31, JAN. 31, APR. 30, JULY 31, OCT. 31, JAN. 31, APR. 30, JULY 31,
1995 1996 1996 1996 1996 1997 1997 1997
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Total revenues............................ $50,854 $45,290 $45,215 $53,901 $56,414 $57,275 $63,181 $67,053
Expenses:
Cost of earned revenues................. 40,939 36,666 36,039 42,126 45,010 46,255 49,707 51,440
General and administrative.............. 5,276 4,895 4,981 5,332 5,351 5,405 6,659 6,365
Depreciation and amortization........... 1,920 1,946 1,689 2,069 2,073 2,040 2,114 2,463
------- ------- ------- ------- ------- ------- ------- -------
Total expenses.................... 48,135 43,507 42,709 49,527 52,434 53,700 58,480 60,268
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes................ 2,719 1,783 2,506 4,374 3,980 3,575 4,701 6,785
Provision for income taxes................ 1,197 669 1,062 790 1,745 1,261 1,882 2,934
------- ------- ------- ------- ------- ------- ------- -------
Net income................................ $ 1,522 $ 1,114 $ 1,444 $ 3,584 $ 2,235 $ 2,314 $ 2,819 $ 3,851
======= ======= ======= ======= ======= ======= ======= =======
Earnings per share
Primary................................. $ 0.14 $ 0.11 $ 0.14 $ 0.33 $ 0.20 $ 0.21 $ 0.26 $ 0.35
Fully diluted........................... $ 0.14 $ 0.11 $ 0.14 $ 0.33 $ 0.20 $ 0.21 $ 0.26 $ 0.35
AS A PERCENTAGE OF TOTAL REVENUES:
Total revenues............................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Expenses:
Cost of earned revenues................. 80.5 81.0 79.7 78.2 79.8 80.8 78.7 76.7
General and administrative.............. 10.4 10.8 11.0 9.9 9.5 9.4 10.5 9.5
Depreciation and amortization........... 3.8 4.3 3.7 3.8 3.7 3.6 3.4 3.7
------- ------- ------- ------- ------- ------- ------- -------
Total expenses.................... 94.7 96.1 94.4 91.9 93.0 93.8 92.6 89.9
------- ------- ------- ------- ------- ------- ------- -------
Income before income taxes................ 5.3 3.9 5.6 8.1 7.0 6.2 7.4 10.1
Provision for income taxes................ 2.3 1.5 2.4 1.5 3.0 2.2 3.0 4.4
------- ------- ------- ------- ------- ------- ------- -------
Net income................................ 3.0% 2.4% 3.2% 6.6% 4.0% 4.0% 4.4% 5.7%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

The Company has historically experienced variability in revenues, income
before income taxes and net income on a quarterly basis. A significant amount of
this variability is due to the fact that the Company's business is subject to
seasonal fluctuations, with activity in its second and occasionally third fiscal
quarter (the quarters ended January 31 and April 30 in a given fiscal year)
being adversely affected by winter weather. For example, the Company's revenues,
income before income taxes and net income for the second and third fiscal
quarters of 1996 were adversely affected by severe winter weather, including
significant snowfall, experienced at that time. In addition, budgetary spending
patterns of significant customers, which often run on a calendar year basis,
have resulted in greater volatility of second fiscal quarter results. The
Company has witnessed

16
<PAGE> 17

increased sales of engineering services in recent years, and an increase in the
level of such services may offset the effect of these seasonal factors, although
no assurance can be given.

The Company has experienced and expects to continue to experience quarterly
fluctuations in revenues, income before income taxes and net income as a result
of other factors, including the timing and volume of customers' construction and
maintenance projects, the commencement, renewal or termination of master service
agreements, safety performance and the timing of additional costs to support
growth by acquisition or otherwise.

LIQUIDITY AND CAPITAL RESOURCES

The Company's needs for capital are attributable primarily to its needs for
equipment to support its contractual commitments to customers and its needs for
working capital sufficient for general corporate purposes. Capital expenditures
have been financed by operating and capital leases and by bank borrowings. To
the extent that the Company seeks to grow by acquisitions that involve
consideration other than Company stock, the Company's capital requirements may
increase, although the Company is not currently subject to any commitments or
obligations with respect to any acquisitions. The Company's sources of cash have
historically been from operating activities, bank borrowings and from proceeds
arising from the sale of idle and surplus equipment and real property.

For fiscal 1997, net cash provided by operating activities was $9.8 million
compared to $13.8 million for fiscal 1996 and $12.3 million for fiscal 1995. The
decrease in fiscal 1997 was due primarily to an increase in accounts receivable.

For fiscal 1997, net cash used in investing activities for capital
expenditures was $12.1 million, compared to $10.7 million in fiscal 1996 and
$8.7 million in fiscal 1995. For fiscal 1997, these expenditures were for the
normal replacement of equipment and the buyout of certain operating leases on
terms favorable to the Company. For fiscal 1996, these expenditures were for
normal equipment replacement and for expansion in the underground utility
locating group's geographic market. In addition to equipment purchases, the
Company obtained approximately $3.3 million of equipment in fiscal 1997, $3.0
million of equipment in fiscal 1996, and $4.4 million of equipment in fiscal
1995 under noncancellable operating leases.

On April 28, 1997, the Company signed a new $35 million credit agreement
arranged by a group of banks led by Dresdner Bank Lateinamerika AG. The Company
utilized $10.2 million of the new facilities to satisfy its then outstanding
long-term debt, $4.2 million to finance its increased working capital
requirements, and $800,000 for capital equipment expenditures. The new credit
agreement, in total, provides for a (i) $10.0 million revolving working capital
facility, (ii) $10.0 million standby letter of credit facility, (iii) $9.0
million five-year term loan, and (iv) $6.0 million revolving equipment
acquisition facility. The new credit agreement increased the level of available
financing by $11.2 million over the limits set in the Company's previous credit
facility. The Company sought this increased borrowing to facilitate its ability
to meet its working capital needs in order to sustain its current level of
internal growth.

The new credit agreement requires the Company to maintain certain financial
covenants and conditions such as not more than a 3.0:1 debt-to-equity ratio, a
current ratio of not less than 1.4:1, a quick ratio of not less than 0.75:1, and
net profit levels of $4.0 million in the first year, increasing thereafter in
$750,000 increments, as well as placing restrictions on encumbrances of assets
and creation of additional indebtedness. The new credit agreement also limits
the payment of cash dividends to 50% of the fiscal net after tax profits. At
July 31, 1997, the Company was in compliance with all covenants and conditions
under the credit facility.

The revolving working capital facility is available for a one-year period
and bears interest, at the option of the Company, at the bank's prime interest
rate minus 1.00% or LIBOR plus 1.50%. As of July 31, 1997, the Company had
borrowed $4.2 million against the revolving working capital facility to meet
current working capital requirements, leaving an available borrowing capacity of
$5.8 million. At July 31, 1997, the interest rate on the outstanding balance was
at LIBOR plus 1.50% (7.56%).

The term loan facility has a five-year maturity and bears interest at the
bank's prime interest rate minus 0.50% (8.00% at July 31, 1997). The term loan
principal and interest is payable in quarterly installments

17
<PAGE> 18

through April, 2002. The Company used $9.0 million of the facility to refinance
the indebtedness under the previous revolving credit facility. During fiscal
1997, the Company repaid $500,000 on this facility.

The revolving equipment acquisition facility is available for a one-year
period and bears interest, at the option of the Company, at the bank's prime
interest rate minus 0.75% or LIBOR plus 1.75%. Advances against this facility
are converted into term loans with maturities not to exceed 48 months. The
outstanding principal on the equipment acquisition term loans is payable in
monthly installments through January 2001. As of July 31, 1997, the Company had
borrowed $1.2 million to refinance the indebtedness under the previous equipment
acquisition term loans and an additional $0.8 million to finance the acquisition
of new equipment. The Company repaid $100,000 and has remaining available
borrowing capacity of $4.1 million under this facility. At July 31, 1997, the
interest rate on the outstanding equipment acquisition term loans was at LIBOR
plus 1.75% (7.81%).

The standby letter of credit facility is available for a one-year period.
At July 31, 1997, the Company had $9.2 million in outstanding standby letters of
credit issued as security to the Company's insurance administrators as part of
its self-insurance program, leaving $0.8 million of available borrowing
capacity.

CCG maintains a $6.6 million working capital bank credit facility. The
interest rate on this credit facility is at the bank's prime rate plus 0.75% and
is collateralized by 75% of the eligible trade accounts receivable and
inventories. During 1997, certain financial covenants were breached and the bank
waived such violations. At July 31, 1997, CCG was in compliance with the bank
credit facility covenants and conditions. At July 31, 1997, the outstanding
principal balance was $5.9 million. This credit facility was an existing
arrangement made prior to the CCG Acquisition.

Net days of contract revenues in trade accounts receivable, including
retainage, was 52 days at July 31, 1997, compared to 41 days at July 31, 1996
and 48 days at July 31, 1995.

The Company foresees its capital resources together with existing cash
balances to be sufficient to meet its financial obligations, including the
scheduled debt payments under the new credit agreement and operating lease
commitments, and to support the Company's normal replacement of equipment at its
current level of business for at least the next twelve months. The Company's
future operating results and cash flows may be affected by a number of factors
including the Company's success in bidding on future contracts and the Company's
continued ability to effectively manage controllable costs.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 1997, the FASB issued SFAS No. 128 "Earnings per Share" which
changes the method of calculating earnings per share and is effective for fiscal
years ending after December 15, 1997. SFAS No. 128 requires the presentation of
"basic" earnings per share and "diluted" earnings per share on the face of the
income statement. Basic earnings per share is computed by dividing the net
income available to common shareholders by the weighted average shares of
outstanding common stock. The calculation of diluted earnings per share is
similar to basic earnings per share except the denominator includes dilutive
common stock equivalents such as stock options and warrants. The Company will
adopt SFAS No. 128 in fiscal 1998 as early adoption is not permitted. The
disclosure of earnings per share under SFAS No. 128 is not expected to be
materially different than the current disclosure of earnings per share.

In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income"
which establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general purpose financial statements. This statement requires that an enterprise
classify items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial position. This statement is effective for
fiscal years beginning December 15, 1997.

18
<PAGE> 19

operating segments in interim financial reports issued to shareholders. It also
establishes the standards for related disclosures about products and services,
geographic areas, and major customers. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. The financial information is required to be
reported on the basis that it is used internally for evaluating segment
performance and deciding how to allocate resources to segments. Operating
segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. This statement is effective for financial statements for periods
beginning after December 15, 1997.

Management is currently evaluating the requirements of SFAS No. 130 and No.
131, respectively.

19
<PAGE> 20

BUSINESS

OVERVIEW

In July 1997, Dycom acquired CCG, a Pennsylvania-based provider of
construction services to cable television multiple system operators. CCG
generated revenues of $67.7 million in its fiscal year 1997. This transaction
diversified Dycom's telephone company customer base to include a broader mix of
work for cable television multiple system operators. The acquisition also
created a greater geographic presence for Dycom in the Mid-Atlantic, Midwest and
Northeast regions of the United States.

INDUSTRY OVERVIEW

The telecommunications industry is undergoing rapid change. Deregulation,
competitive deployment of networks and growth in consumer demand for enhanced
telecommunications services create the need for the construction of additional
telecommunications infrastructure for new and existing providers. As a result of
this increased need for upgraded and expanded telecommunications infrastructure
and the focus on reducing costs, telecommunications providers have been
outsourcing and are expected to continue to outsource, telecommunications
infrastructure engineering, construction and maintenance services.

Deregulation. The Telecom Act, enacted on February 8, 1996, substantially
revised the Federal Communications Act of 1934. It established a dual
federal-state regulatory framework for eliminating certain barriers to
competition faced by competitors of incumbent local exchange carriers. Among
other things, it preempts state and local government control over access to the
telecommunications market and opens such market to new entrants. The elimination
of entry barriers will lead to increased construction of competing
telecommunications networks as competitive telecommunications providers,
existing as well as new, expand into new markets and offer services that once
were reserved for incumbents. The competition generated by the Telecom Act is
expected to continue to spur existing service providers to expand and improve
their existing facilities.

While the Telecom Act significantly removed barriers to competition, many
state regulatory commissions have modified regulation of telecommunications
providers. Historically, telecommunications providers were limited by state
regulations to earning a predetermined return on capital investments. Since
1994, a significant majority of the states have repealed such regulations,
substituting in their place regulations which limit the price telecommunications
providers may charge consumers, while eliminating the caps on the profits they
may earn. These new state regulatory frameworks eliminate profit guarantees for
telecommunications providers, while offering the potential for enhanced
profitability. The combined effect of increased competition and the

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prospects for greater profitability will lead new and existing
telecommunications providers to become increasingly efficient in constructing
and maintaining telecommunications infrastructure.

Competitive Deployment of Networks. Telecommunications providers and cable
television multiple system operators are actively expanding networks to provide
their customers with a combined offering of voice, video and data communications
services. Additionally, electric utilities are currently using fiber optic
technology to develop and maintain demand monitoring systems. These systems can
be used as a means of controlling the need to build additional generation
capacity and also provide electric utilities opportunities to market excess
communications capacity to telecommunications providers. Once built, these
systems will require continuous maintenance and periodic upgrading. Such
additional telecommunications infrastructure will also permit long distance
carriers and content providers to connect customers without the need to pay
exchange access fees to their competitors, local exchange carriers or cable
companies.

While data specific to the telecommunications engineering, construction and
maintenance industry is not readily available, one indication of the industry's
growth opportunity is the level of sales of fiber optic cable. According to KMI
Corporation, an independent industry research firm, approximately 11 million
kilometers of fiber optic cable were sold in 1996 in North America, an increase
of 22% from slightly over 9 million kilometers in 1995. By 2001, annual fiber
optic demand is expected to exceed 20 million kilometers. KMI estimates that
capital expenditures relating to the purchase of fiber optic cable will grow
from $2.1 billion in 1997 to $3.3 billion in 2001.

Growth in Consumer Demand. Increasing consumer demand is also spurring
growth in the telecommunications industry. Not only has the amount of
traditional telephone voice traffic increased, but the growth of personal
computers and modems has created significant data traffic from a wide variety of
sources. For example, businesses with multiple locations increasingly require
geographically dispersed local area networks to be linked in sophisticated wide
area networks handling large volumes of telecommunications traffic. In addition,
the Internet has expanded beyond its traditional data transmission and
file-sharing functions to offer e-mail, new data sources, commercial services,
transaction processing, independent bulletin boards, the World Wide Web and
voice transmission. To handle the growing volume of communications traffic and
to provide faster and higher quality transmission, telecommunications providers
will be required to upgrade and expand their telecommunications networks and
related infrastructure.

Consumer demand for services provided over fiber optic cable has resulted
in a demand for broader bandwidth. Limited by the size of the cable or other
facilities through which communications flow, bandwidth controls both the speed
and breadth of voice, video and data communications. Because of the physical
limitations of the existing network facilities, there is an immediate need to
upgrade facilities with new and innovative technology, expanding and, in many
cases, replacing existing telecommunications infrastructure to allow for
increased bandwidth and the resultant faster and greater volume of
communications flow.

Even local governments are increasingly becoming directly involved in
telecommunications network construction because of the perception that
telecommunications infrastructure is essential to economic growth. Local
governments spur increased demand for cable television construction services by
imposing requirements for improved services as a precondition to renewal of
franchises. Additionally, in some cases, local governments view the construction
of such infrastructure as an appropriate governmental response to private
enterprises' failure to act in a timely manner, and the cost of expanding and
upgrading telecommunications infrastructure is appearing more frequently in
governmental budgets.

Increased Outsourcing. The need to upgrade and expand telecommunications
infrastructure as a result of deregulation, competitive deployment of networks
and the growth in consumer demand for enhanced telecommunications services have
stimulated, and are expected to continue to stimulate, telecommunications
providers to increase the current level of outsourcing to the telecommunications
engineering, construction and maintenance services industry. The outsourcing
trend has largely been driven by the efforts of telecommunications providers to
reduce costs and to focus on their core competencies. Independent contractors,
such as the Company, typically have lower cost structures than the
telecommunications providers, primarily as a result of the independent
contractors' lower direct and overhead cost structures. In addition, the Company
believes that

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telecommunications providers are seeking comprehensive solutions to their
infrastructure needs by utilizing fewer qualified contractors to provide a full
range of telecommunications infrastructure services.

Participant Consolidation. Historically, the telecommunications
engineering, construction and maintenance services industry has been highly
fragmented. Although industry annual revenues are estimated to be several
billions of dollars, few of these companies are publicly traded. Most
engineering, construction and maintenance service companies are small,
privately-held companies with annual revenues of less than $100 million. While
the industry has attracted some participation in the past from pipeline and
power plant construction firms, to date these firms have not significantly
impacted the industry.

In response to the newly deregulated operating environment, the industry
has experienced some increase in business combinations among the smaller private
firms. The resulting combinations, for the most part, however, may be unable,
due to resource constraints, to adequately meet the standards demanded by
telecommunications providers seeking to outsource their telecommunications
infrastructure services function. Going forward, service firms will need
significant management expertise, technical capabilities and capital resources
to provide the level of service necessary to gain significant market share. As a
result, the Company believes that the industry will experience consolidation in
the future and that strategic acquisition opportunities will continue to become
available.

THE DYCOM SOLUTION

Dycom provides a comprehensive solution to telecommunications providers
operating throughout the United States who need to deploy large and complex
telecommunications infrastructure quickly and with a high level of quality. The
Company's ability to serve a wide and diverse geographic area and its
demonstrated expertise in engineering and construction project management give
Dycom a distinct competitive advantage in obtaining customer service contracts.
As telecommunications providers begin to offer new and expanded services on a
global basis, the time to market for these services is a critical factor in
their success. Dycom is able to rapidly mobilize its capital equipment,
financial assets and personnel resources to effectively respond to the
increasing scale and time constraints of customer demands. Dycom has offered its
telecommunications engineering, construction and maintenance services solution
on a national basis to local and long distance communications carriers,
competitive access providers, cable television multiple system operators and
electric utilities since 1984.

BUSINESS STRATEGY

Dycom's objective is to be a leading high quality and cost effective
provider of engineering, construction and maintenance services to the
telecommunications industry. To meet this objective, Dycom has identified the
following key business strategies:

Leverage Expertise and Leadership Position. Dycom believes that in this
highly fragmented industry, its technical expertise and reputation should give
it a competitive advantage in securing new business from its current customers,
as well as from new customers. The Company believes that its reputation for
quality and reliability, operating efficiency, financial and personnel
resources, and technical expertise (e.g., ability to serve a wide geographic
area and ability to provide customers with a comprehensive solution) provide it
with a competitive advantage in bidding for and winning new contracts. The
Company intends to pursue the larger, more technically complex
telecommunications infrastructure projects where its technical expertise and
reputation should have a greater impact.

Effectively Utilize Decentralized Management. In order to enhance customer
service, the Company maintains a focused, decentralized management structure.
Dycom's holding company structure emphasizes the importance of local
subsidiary-based management teams, which are granted significant operating
flexibility in running their business. The Company believes that this
decentralized operating structure enables management to make decisions and
mobilize resources more quickly based on knowledge of the local markets and the
specific needs of their customers. The Company complements the decentralized
operating structure by sharing operating information among its subsidiaries.

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Reduce Operating Costs and Increase Productivity. Dycom believes that the
cost savings in centralizing administrative tasks, such as insurance, asset
management, and information technology through Dycom's holding company
structure, combined with decentralized operating management, enables the Company
to be a more cost-effective provider of telecommunications engineering,
construction and maintenance services. As a service provider, the productivity
of its own work force and the work of its subcontractors has the single largest
impact on the Company's cost structure. High quality, decentralized management
assists the Company in maintaining quality performance from its work force, as
well as managing its costs. In order to respond to peak demands for its services
and to control labor expenses, Dycom also redeploys manpower among its
subsidiaries.

Refine and Enhance Formal Estimating Process. The Company utilizes
proprietary software to collect, maintain and statistically analyze extensive
amounts of historical cost and pricing information. The Company's operating
subsidiaries collect detailed cost and pricing information on a state by state,
customer by customer and job by job basis. The Company uses this data and
analysis as part of a formal estimating process when reviewing new business
opportunities. Dycom believes that, as a result of this process, it is able to
price jobs more accurately and more effectively allocate its resources. The
Company will continually seek to enhance the effectiveness of its proprietary
software system by expanding the amount of information that it gathers and
improving the analysis of the data.

GROWTH STRATEGY

As a result of the increased demand for telecommunications engineering,
construction and maintenance services, greater emphasis on outsourcing of such
services by telecommunications providers, and the fragmented nature of the
industry, the Company believes there are significant opportunities to expand its
business internally and through acquisitions.

Internal Growth. Dycom is focused on generating internal growth by: (i)
increasing the volume of services to existing customers; (ii) expanding the
scope of services to existing customers; (iii) broadening its customer base; and
(iv) geographically expanding its service area. The Company is also seeking to
reduce operating expenses and improve operating margins by centralizing costs
such as insurance administration, asset management and information technology,
thereby eliminating redundancies at the subsidiary level. Additionally, the
competitive pressures of deregulation have prompted several existing customers
to increase the outsourcing of noncore activities, which can provide
opportunities for enhancing internal growth without necessarily requiring the
Company to achieve market share gains.

Growth Through Acquisitions. Dycom intends to capitalize on the current
opportunity to make strategic acquisitions of engineering, construction and
maintenance services companies serving the telecommunications industry. Dycom
believes that as competition intensifies, smaller companies will seek to
consolidate with companies such as Dycom. Dycom will target acquisitions that
provide complementary services in existing Dycom markets or allow expansion into
new geographic areas. For its acquisition targets, the Company's key criteria
are profitability in excess of industry standards, stable and growing customer
bases, proven operational and technical competence, and experienced management
that fits within Dycom's decentralized operating structure. Further, the Company
seeks the opportunity to realize cost savings through the elimination of
redundant costs and economies of scale in certain items such as insurance,
information technologies and administrative functions. Dycom believes that
significant revenue and earnings growth are attainable through acquisitions;
however, there can be no assurance that the Company will be able to acquire and
integrate such businesses successfully or that such acquisitions will have a
positive effect on the Company's operating results.

The Company believes that a variety of attractive consolidation
opportunities exist within the currently fragmented telecommunications
engineering, construction and maintenance services industry. The Company
believes that additional acquisition opportunities may be available to implement
its acquisition strategy upon completion of this Offering. See "Use of
Proceeds."

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SERVICES

Telecommunications Services

Engineering. Dycom provides outside plant engineers and drafters to local
exchange carriers and competitive access providers. The Company designs aerial,
buried and underground fiber optic and copper cable systems from the telephone
central office to the ultimate consumer's home or business. Engineering services
for local exchange carriers include the design of service area concept boxes,
terminals, buried and aerial drops, transmission design and the proper
administration of feeder and distribution cable pairs. For competitive access
providers, Dycom designs building entrance laterals, fiber rings and conduit
systems. The Company obtains rights of way and permits in support of engineering
activities, and provides construction management and inspection personnel in
conjunction with engineering services or on a stand alone basis. For cable
television multiple system operators, Dycom performs make ready studies, strand
mapping, field walk out, computer-aided radio frequency design and drafting, and
fiber cable routing and design.

Construction and Maintenance. The services provided by the Company include
the placing and splicing of cable, excavation of trenches in which to place the
cable, placement of related structures such as poles, anchors, conduits,
manholes, cabinets and closures, placement of drop lines from the main
distribution lines to the customer's home or business, and maintenance and
removal of these facilities. The Company has the capacity to directionally bore
the placement of cables, a highly specialized and increasingly necessary method
of placing buried cable networks in congested urban and suburban markets where
trenching is highly impractical.

Premise Wiring. The Company also provides premise wiring services to a
variety of large corporations and certain governmental agencies. These services,
unlike the engineering, construction and maintenance services provided under
various master service agreements and to cable television multiple system
operators, are limited to the installation, repair and maintenance of
telecommunications infrastructure within improved structures. Projects include
the placement and removal of various types of cable within buildings and
individual offices. These services generally include the development of
communication networks within a company or government agency related primarily
to the establishment and maintenance of computer operations, telephone systems,
Internet access and communications monitoring systems established for purposes
of monitoring environmental controls or security procedures.

Underground Utility Locating Services

The Company is a provider of underground utility locating services,
primarily to telecommunications providers. Under a variety of state laws,
excavators are required to locate underground utilities prior to excavating.
Utilities located include telephone, cable television, power and gas. Recently,
excavators performing telecommunications network upgrades and expansions have
generated significant growth in requests for underground utility locating, and
the Company expects this trend to continue. The Company is currently a party to
30 underground utility locating contracts. These services are offered throughout
the United States.

Electrical Construction and Maintenance Services

The Company performs electrical construction and maintenance services for
electric companies. This construction is performed primarily as a stand alone
service, although at times it is performed in conjunction with services for
telecommunications providers. These services include installing and maintaining
electrical transmission and distribution lines, setting utility poles and
stringing electrical lines, principally above ground. The work performed often
involves high voltage splicing and, on occasion, the installation of underground
high voltage distribution systems. The Company also provides the repair and
replacement of lines which are damaged or destroyed as a result of weather
conditions.

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Revenues by Service Group

For the fiscal years ended July 31, 1995, 1996 and 1997, the percentages of
the Company's total contract revenues earned were derived from
telecommunications services, underground utility locating services and
electrical construction and maintenance services as set forth below.

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Telecommunications services................................. 86% 87% 87%
Underground utility locating services....................... 8 7 6
Electrical construction and maintenance services............ 6 6 7
--- --- ---
Total............................................. 100% 100% 100%
=== === ===
</TABLE>

CUSTOMER RELATIONSHIPS

Dycom's current customers include local exchange carriers such as BellSouth
Telecommunications, Inc., SBC Communications, Inc., U.S. West Communications,
Inc., Sprint Corporation, Ameritech Corporation, GTE Corporation, The Southern
New England Telephone Company, Citizen Utilities and Cincinnati Bell Telephone.
Dycom also currently provides telecommunications engineering, construction and
maintenance services to a number of cable television multiple system operators
including Comcast Cable Communications Inc., Cablevision, Inc., Falcon Cable
Media, Time Warner, Inc. and MediaOne, Inc. Dycom also provides its services to
long distance carriers such as MCI Telecommunications Corporation and AT&T
Corporation, as well as to competitive access providers such as MFS
Communications Company, Inc. and Brooks Fiber Corporation. Premise wiring
services have been provided to, among others, Lucent Technologies, Inc., Duke
University, International Business Machines Corporation, and several state
governments. The Company also provides construction and maintenance support to
Lee County Electrical Cooperative, Florida Power & Light Company, and Florida
Power Corporation.

A significant amount of the Company's business is performed under master
service agreements. These agreements with telecommunications providers are
generally exclusive requirement contracts, with certain exceptions, including
the customer's option to perform the services with its own regularly employed
personnel. The agreements are typically three to five years in duration,
although the terms typically permit the customer to terminate the agreement upon
90 days prior written notice. Each agreement contemplates hundreds of individual
construction and maintenance projects valued generally at less than $10,000
each. Other jobs are bid by the Company on a nonrecurring basis.

Although historically master service agreements have been awarded through a
competitive bidding process, recent trends have been toward securing or
extending such contracts on negotiated terms. With the rapid expansion of the
telecommunications market and the immediate need for upgrading existing, as well
as constructing new, telecommunications infrastructure, the Company believes
that more master service agreements will be awarded on the basis of negotiated
terms as opposed to the competitive bidding process.

Sales and marketing efforts of the Company are the responsibility of the
management of Dycom and its operating subsidiaries.

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BACKLOG

The Company's backlog at July 31, 1997 was $314.4 million. As of July 31,
1997, the Company expected to complete approximately 66% of this backlog within
the next fiscal year. Due to the nature of its contractual commitments, in many
instances the Company's customers do not commit to the volume of services to be
purchased under the contract, but rather commit the Company to perform these
services if requested by the customer and commit to obtain these services from
the Company if they are not performed internally. Many of the contracts are
multi-year agreements, and the Company includes the full amount of services
projected to be performed over the life of the contract. The Company includes
all services projected to be performed over the life of the contract in its
backlog due to its historical relationships with its customers and experience in
procurements of this nature. Historically, the Company has not experienced a
material variance between the amount of services it expects to perform under a
contract and the amount actually performed for a specified period. There can be
no assurance, however, as to the customer's requirements during a particular
period or that such estimates at any point in time are accurate.

SAFETY AND RISK MANAGEMENT

The Company is committed to ensuring that its employees perform their work
in the safest possible manner. The Company regularly communicates with its
employees to promote safety and to instill safe work habits. Dycom's risk
manager, a holding company employee, reviews all accidents and claims throughout
the operating subsidiaries, examines trends and implements changes in procedures
or communications to address any safety issues.

The primary claims rising in the Company's business are workers'
compensation and other personal injuries, various general liabilities, and
vehicle liability (personal injury and property damage). The Company is
self-insured for automobile liability up to $1.0 million, for general liability
up to $1.0 million, and for workers' compensation, in states where the Company
elects to do so, up to $1.0 million per occurrence and $2.0 million in the
aggregate. The Company has umbrella coverage up to a policy limit of $30.0
million.

The Company carefully monitors claims and participates actively in claims
estimates and adjustments. The estimated costs of self-insured claims, which
include estimates for incurred but not reported claims, are accrued as
liabilities on the Company's balance sheet. Due to changes in the Company's loss
experience in recent years, insurance accruals have varied from year to year and
have had an effect on operating margins. See "Management's Discussion and
Analysis of Financial Condition and Results of Operation" and Note 1 of the
Notes to Consolidated Financial Statements.

COMPETITION

The telecommunications engineering, construction and maintenance services
industry in which the Company operates is highly competitive, requiring
substantial resources and skilled and experienced personnel. The Company
competes with other independent contractors in most of the markets in which it
operates, several of which are large domestic companies that have greater
financial, technical and marketing resources than the Company. In addition,
there are relatively few, if any, barriers to entry into the markets in which
the Company operates and, as a result, any organization that has adequate
financial resources and access to technical expertise may become a competitor to
the Company. A significant portion of the Company's revenues are currently
derived from master service agreements and price is often an important factor in
the award of such agreements. Accordingly, the Company could be outbid by its
competitors in an effort to procure such business. There can be no assurance
that the Company's competitors will not develop the expertise, experience and
resources to provide services that are equal or superior in both price and
quality to the Company's services, or that the Company will be able to maintain
or enhance its competitive position. The Company may also face competition from
the in-house service organizations of its existing or prospective customers,
including telecommunications providers, which employ personnel who perform some
of the same types of services as those provided by the Company. Although a
significant portion of these services is currently outsourced, there can be no
assurance that existing or prospective customers of the Company will continue to
outsource telecommunications engineering, construction and maintenance services
in the future.

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The Company believes that the principal competitive factors in the market
for telecommunications engineering, construction and maintenance services
include technical expertise, reputation, price, quality of service, availability
of skilled technical personnel, geographic presence, breadth of service
offerings, adherence to industry standards and financial stability. The Company
believes that it competes favorably with its competitors on the basis of these
competitive factors.

EMPLOYEES

As of July 31, 1997, the Company employed 2,864 persons. The number of
employees of the Company and its subsidiaries varies according to the work in
progress. As a matter of course, the Company maintains a nucleus of technical
and managerial personnel from which it draws to supervise all projects.
Additional employees are added as needed to complete specific projects.

None of the Company's employees are represented by a labor union. CCG is
currently a party to two collective bargaining agreements with local bargaining
units in Philadelphia, Pennsylvania, and New York, New York, although none of
its current employees are subject to the agreements. The Company has never
experienced a work stoppage or strike. The Company believes that its employee
relations are good.

FACILITIES

The Company leases its executive offices in Palm Beach Gardens, Florida.
The Company's subsidiaries operate from owned or leased administrative offices,
district field offices, equipment yards, shop facilities and temporary storage
locations. The Company owns facilities in Phoenix, Arizona; Durham, North
Carolina; Pinellas Park, Florida; and West Palm Beach, Florida. It also leases,
pursuant to long-term noncancelable leases, facilities in West Chester,
Pennsylvania; Bridgeport and Wallingford, Connecticut; Knoxville, Tennessee; and
Greensboro, North Carolina. The Company also leases and owns other smaller
properties as necessary to enable it to efficiently perform its obligations
under master service agreements and other specific contracts. The Company
believes that its facilities are adequate for its current operations.

LEGAL PROCEEDINGS

In September 1995, the State of New York commenced a sales and use tax
audit of CCG for the years 1989 through 1995. As a result of the audit, certain
additional taxes were paid by CCG in fiscal 1996. The State of New York has
claimed additional amounts due from CCG for sales taxes and interest for the
periods through August 31, 1995. See Note 15 of the Notes to Consolidated
Financial Statements.

In the normal course of business, certain subsidiaries of the Company have
other pending and unasserted claims. Although the ultimate resolution and
liability of these claims cannot be determined, management believes the final
disposition of these claims will not have a material adverse impact on the
Company's consolidated financial condition or results of operations.

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MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The table below sets forth the names and ages of the directors, executive
officers and key employees of the Company as well as the positions and offices
held by such persons. A summary of the background and experience of each of
these individuals is set forth after the table. Each director holds office for a
three year term and until his successor has been elected and qualified. A number
of key employees, including officers, have employment agreements, while others
serve at the discretion of the Company's Board of Directors. There are no family
relationships among the directors or officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Thomas R. Pledger....................... 59 Chairman of the Board of Directors and Chief
Executive Officer
Steven E. Nielsen....................... 34 President, Chief Operating Officer and Director
Louis W. Adams, Jr...................... 59 Director
Walter L. Revell........................ 62 Director
Ronald L. Roseman....................... 60 Director
Ronald P. Younkin....................... 55 Director
Douglas J. Betlach...................... 45 Vice President, Chief Financial Officer and Treasurer
Darline M. Richter...................... 36 Vice President and Controller
Patricia B. Frazier..................... 62 Corporate Secretary
George H. Tamasi........................ 49 President and Chief Executive Officer of CCG, a
Company subsidiary
Thomas J. Polis......................... 53 Executive Vice President, Secretary and Treasurer of
CCG, a Company subsidiary
</TABLE>

Thomas R. Pledger is Chairman of the Board of Directors and Chief Executive
Officer of Dycom. Mr. Pledger has been in the industry since 1960, and in 1968
became President of Burnup & Sims, Inc., which went public that year and was
acquired by MasTec, Inc. in 1994. Mr. Pledger left Burnup & Sims in 1976. Mr.
Pledger's relationship with Dycom began in 1979 as a consultant. He became a
Director in 1981 and President and Chief Executive Officer in 1984. His current
employment contract as Chief Executive Officer with the Company expires November
30, 2000. He serves on the Board's Executive and Nominating Committees, as well
as on the Board of Directors for each of the Company's subsidiaries.

Steven E. Nielsen is President and Chief Operating Officer of Dycom. His
employment contract expires on March 10, 1999. Mr. Nielsen has held this
position since August 1996 and has been with Dycom since 1993. As a member of
Dycom's Board of Directors since 1996, he serves on the Board's Executive
Committee and on the Board of Directors of CCG. He previously served as
President of Ansco & Associates, Inc. and Fiber Cable, Inc., two of Dycom's
subsidiaries. Prior to joining the Company, Mr. Nielsen was Division
Manager/Regional Manager of Henkels & McCoy, Inc., a gas, power and telephone
utility contractor, from 1991 to 1993, and was employed in various positions
with this company or a predecessor since 1985.

Louis W. Adams, Jr. is a retired attorney and formerly a partner with the
law firm of Adams & Adams. Mr. Adams has been on the Board since 1969 and
currently serves on the Board's Audit and Compensation, Executive, Nominating
and Finance Committees. Mr. Adams is also a member of the Board of Directors of
each of the Company's subsidiaries, other than CCG.

Walter L. Revell has been a Director since 1993 and currently serves on the
Board's Audit and Compensation, and Finance Committees. He has been Chairman and
Chief Executive Officer of H.J. Ross Associates, Inc. since 1991. The firm
provides consulting engineering, architectural and planning services. Mr. Revell
also serves on the Board of Directors of RISCORP, Inc., which provides managed
care workers' compensation, St. Joe Corporation, a diversified corporation in
sugar and real estate, and Hotelecopy, Inc., an international fax mail service
company.

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Ronald L. Roseman has been a Director since 1982. He formerly served as
President and Chief Operating Officer of Dycom from August 1, 1993 through
August 26, 1996. He has been President of Coastal Electric Constructors, Inc.
since 1991.

Ronald P. Younkin is President of Greenlawn Mobile Home Sales, Inc., which
sells mobile homes and operates mobile home parks. Mr. Younkin has been a
Director of the Company since 1975. Mr. Younkin serves on the Board's Audit and
Compensation, Finance, and Nominating Committees.

Douglas J. Betlach is Vice President, Chief Financial Officer and
Treasurer. Mr. Betlach has been with Dycom since 1992. He previously served as
Controller for Cal-Central Marketing Corporation, Del Monte Processed Foods and
RJR Nabisco, Inc.

Darline M. Richter has been Vice President and Controller since 1996. She
has been employed by the Company since 1991 and previously was employed by
Deloitte & Touche LLP as a tax accountant.

Patricia B. Frazier has been employed by Dycom since 1983. She has served
as Corporate Secretary since 1984. She previously served as Corporate Secretary
at Rubin Construction Company and Burnup & Sims, Inc.

George H. Tamasi is President and Chief Executive Officer of CCG, the
Company's newly acquired subsidiary. Mr. Tamasi has entered into a five year
employment contract with CCG, which may be canceled upon mutual consent after
July 29, 2000. Mr. Tamasi also serves on the Board of Directors of CCG.

Thomas J. Polis is Executive Vice President, Secretary and Treasurer of
CCG. Also a Director of CCG, Mr. Polis has a five year employment contract with
CCG, which may be canceled upon mutual consent after July 29, 2000.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CCG, the Company's newly-acquired subsidiary, leases administrative office
facilities from a partnership of which Mr. Tamasi and Mr. Polis, officers of
CCG, are general partners. The properties are located in West Chester,
Pennsylvania, and West Palm Beach, Florida. The leases expire on August 1, 2000
and February 1, 2002 and the rental rates are consistent with prevailing rates
in the respective markets. During fiscal 1997, CCG incurred annual expenses of
$115,200 in connection with the leases.

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<PAGE> 30

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth, as of November 4, 1997, and adjusted at
that date to reflect the sale of the Company's Common Stock offered hereby,
information with respect to the beneficial ownership of the Company's Common
Stock by, as indicated by the letter next to each such beneficial owner, (a)
each Selling Stockholder, (b) each person known to the Company to beneficially
own more than 5% of the outstanding shares of the Company's Common Stock, (c)
each director of the Company and each executive officer, and (d) all executive
officers and directors of the Company as a group. Unless otherwise indicated,
each such stockholder has (i) sole voting and investment power with respect to
the shares beneficially owned by such stockholder and (ii) the same address as
the Company.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE THE OWNED AFTER THE
OFFERING(1) NUMBER OF OFFERING
------------------------ SHARES BEING -------------------
NAME OF OWNER NUMBER PERCENT(1) OFFERED NUMBER PERCENT
- ------------- --------- ---------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Thomas J. Polis (a), (b)................... 1,026,621(2) 9.4% 513,311 513,310 4.1%
235 East Gay Street
West Chester, PA 19380
George H. Tamasi (a), (b).................. 1,026,621(2) 9.4% 513,311 513,310 4.1%
235 East Gay Street
West Chester, PA 19380
Mary Irene Younkin, Individually........... 881,378(3) 8.1% 100,000 781,278 6.3%
and as Executor of the Estate of
Floyd E. Younkin (a), (b)
555 Greenlawn Avenue
Columbus, OH 43223
Thomas R. Pledger (b), (c)................. 698,027(4) 6.4% 0 698,027 5.6%
Steven E. Nielsen (c)...................... 23,950(5) * 0 23,950 *
Louis W. Adams, Jr. (c).................... 12,234(5) * 0 12,234 *
3108 Vistamar Street, Apt. 7
Ft. Lauderdale, FL 33304
Walter L. Revell (c)....................... 13,000(5) * 0 13,000 *
3770 S.W. 8th Street, Suite 200
Coral Gables, FL 33134
Ronald L. Roseman (b), (c)................. 742,546 6.8% 0 742,546 6.0%
4708 West Cayuga, Suite D
Tampa, FL 33614
Ronald P. Younkin (c)...................... 161,597(6)(7) 1.5% 0 161,597 1.3%
555 Greenlawn Avenue
Columbus, OH 43223
Douglas J. Betlach (c)..................... 7,004(5) * 0 7,004 *
Darline M. Richter (c)..................... 1,684(5) * 0 1,684 *
Patricia B. Frazier (c).................... 27,361(5) * 0 27,361 *
All executive officers and directors as a
group(d)................................. 1,687,403(5) 15.5% 0 1,687,403 13.5%
</TABLE>

- ---------------

* Less than 1%
(1) Class includes outstanding shares and presently exercisable stock options
held by directors and executive officers.
(2) Shares were acquired by Messrs. Tamasi and Polis through the exchange of
stock as a result of the CCG Acquisition.

30
<PAGE> 31

(3) Includes 565,461 shares from the Estate of Floyd E. Younkin inherited by
Mary Irene Younkin, Mr. Younkin's wife, as well as 315,917 shares previously
owned by Mrs. Younkin. Mrs. Younkin disclaims any beneficial interest in the
161,597 shares owned by her son, Ronald P. Younkin, a director of the
Company, and 12,661 shares owned by Ronald P. Younkin's wife and children.
Mrs. Younkin serves as the Executor of the Estate of her late husband, Floyd
E. Younkin. Mr. Younkin served as the President and Chief Executive Officer
of the Company from 1969 until 1971 and from 1972 until 1984. He also served
on the Board of Directors from 1969 until 1990.
(4) Excludes 12,252 shares owned by Thomas R. Pledger, Jr., Mr. Pledger's son,
as to which Mr. Pledger disclaims any beneficial interest.
(5) Includes shares that may be acquired within 60 days after September 15, 1997
upon exercise of stock options as follows: Mr. Nielsen 18,250 shares; Mr.
Adams 12,000 shares; Mr. Revell 12,000 shares; Mr. Betlach 2,375 shares; Ms.
Richter 750 shares; Ms. Frazier 750 shares; and all directors and officers
as a group 46,125 shares.
(6) Mr. Younkin exercised 4,000 shares of an exercisable stock option which was
granted to him as a director of the Company. Mr. Younkin gifted said
exercised shares and disclaims any beneficial ownership.
(7) Excludes 12,661 shares owned by Mr. Younkin's wife and children, as to which
Mr. Younkin disclaims any beneficial interest. Excludes 881,378 shares owned
beneficially by Mary Irene Younkin, individually and as Executor of the
Estate of Floyd E. Younkin as to which Mr. Younkin disclaims any beneficial
interest. Mr. Younkin is the son of Mary Irene Younkin.

31
<PAGE> 32

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, $0.33 1/3 par value, and 1,000,000 shares of preferred stock,
$1.00 par value per share (the "Preferred Stock"). Upon completion of the
Offering, there will be 12,444,858 shares of Common Stock issued and
outstanding. No shares of Preferred Stock are outstanding.

COMMON STOCK

At September 29, 1997, there were 10,870,252 shares of Common Stock
outstanding held by approximately 660 stockholders.

The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders. Holders of Common Stock do not
have cumulative rights, so that holders of more than 50% of the shares of Common
Stock are able to elect all of the Company's directors eligible for election in
a given year. The holders of Common Stock are entitled to dividends and other
distributions if and when declared by the Board of Directors out of assets
legally available therefor. See "Price Range of Common Stock and Dividend
Policy." Upon the liquidation, dissolution or winding up of the Company, the
holders of shares of Common Stock are entitled to share pro rata in the
distribution of all of the Company's assets remaining available for distribution
after satisfaction of all the Company's liabilities, including any prior rights
of any Preferred Stock which may be outstanding. There are no redemption or
sinking fund provisions applicable to the Common Stock. Immediately upon
consummation of this Offering, all of the then outstanding shares of Common
Stock will be validly issued, fully paid and nonassessable.

The transfer agent and registrar for the Common Stock is First Union
National Bank of North Carolina, Charlotte, North Carolina.

PREFERRED STOCK

The Company is authorized to issue up to 1,000,000 shares of Preferred
stock, $1.00 par value. There are no shares of Preferred Stock outstanding.
Series of the Preferred Stock may be created and issued from time to time by the
Board of Directors, with such rights and preferences as may be determined by the
Board. The Board of Directors may, without stockholder approval, issue a series
of Preferred Stock with voting and conversion rights which could have the effect
of discouraging a takeover and which could adversely affect the rights of
holders of Common Stock, as it could be used by incumbent management to make a
change in control of the Company more difficult. Under certain circumstances
such shares could be used to create voting impediments or to frustrate persons
seeking to effect a takeover or otherwise gain control of the Company.

ANTI-TAKEOVER PROVISIONS

On June 1, 1992, the Company approved a Shareholder Rights Plan. All
stockholders of record on June 15, 1992 were issued a Right for each outstanding
share of the Company's Common Stock. Each Right entitles the holder to purchase
one-half share of Common Stock for an exercise price of $18, subject to
adjustment to reflect any stock split, stock dividend or similar transaction.
The Right is exercisable only when a triggering event occurs. The triggering
events, among others, are a person or group's (1) acquisition of 20% or more of
Dycom's Common Stock, (2) commencement of a tender offer which would result in
the person or group owning 20% or more of Dycom's Common Stock, or (3)
acquisition of at least 10% of Dycom's Common Stock and such acquisition is
determined to have effects adverse to the Company. The Company can redeem the
Rights at $0.01 per Right, subject to adjustment to reflect any stock split,
stock dividend or similar transaction, at any time prior to ten days after a
triggering event occurs.

Certain officers of the Company have change of control agreements with the
Company, which provide for extraordinary compensation (in general terms, double
the officer's salary and bonuses paid the previous year), upon a change of
control in the Company. Mr. Pledger's employment agreement also permits him to
terminate his employment in the event of a change of control. The total cost to
the Company as a result of these agreements in the event of a change in control
would be approximately $2.07 million. The payment pursuant to these agreements
would be triggered by any person's acquisition of more than fifty percent of the

32
<PAGE> 33

Company's outstanding securities, the sale or transfer of substantially all of
Dycom's assets to someone other than a wholly-owned subsidiary of Dycom, or a
change of control of the Board of Directors.

The Articles of Incorporation of the Company provides that the Board of
Directors is divided into three classes, as nearly equal in number as possible,
with one class of directors being elected each year for a three-year term. The
classification of the Board may have the effect of delaying a change in a
majority of the members of the Company's Board of Directors.

The Company's Articles of Incorporation provides that the affirmative vote
of 80% of the outstanding shares of capital stock of the Company entitled to
vote in elections of directors is required to approve any merger of the Company
with or into another corporation or any sale or transfer of all or a substantial
part of the assets of the Company to, or any sale or transfer to the Company or
any subsidiary in exchange for securities of the Company of any assets (except
assets valued at less than $1,000,000) of, any other corporation or person, if
at the time such other corporation or person is the beneficial owner, or is
affiliated with the beneficial owner, of more than 20% of the outstanding shares
of capital stock of the Company entitled to vote in elections of directors. This
provision is not applicable to any such transaction with another corporation
which was approved by the Company's Board of Directors prior to the time that
such other corporation became a holder of more than 20% of the outstanding
shares of capital stock of the Company.

The Florida Business Corporation Act contains provisions eliminating the
voting rights of "control shares", defined as shares which give any person,
directly or indirectly, ownership of, or the power to direct the exercise of
voting power with respect to, 20% or more of the outstanding voting power of an
"issuing public corporation." A corporation is an issuing public corporation if
it has at least 100 shareholders, its principal place of business, principal
office or substantial assets in Florida and either more than 10% of its
shareholders reside in Florida, more than 10% of its shares are owned by Florida
residents or 1,000 shareholders reside in Florida. The voting rights of control
shares are not eliminated if the articles of incorporation or the bylaws of the
corporation prior to the acquisition provide that the statute does not apply.
Voting rights are restored to control shares if, subsequent to their
acquisition, the corporation's shareholders (other than the holder of control
shares, officers of the corporation and employee directors) vote to restore such
voting rights.

The Florida Business Corporation Act also restricts "affiliated
transactions" (mergers, consolidations, transfers of assets and other
transactions) between "interested shareholders" (the beneficial owners of 10% or
more of the corporation's outstanding shares) and the corporation or any
subsidiary. Affiliated transactions must be approved by two-thirds of the voting
shares not beneficially owned by the interested shareholder or by a majority of
the corporation's "disinterested" directors. The statutory restrictions do not
apply if the corporation has had fewer than 300 shareholders of record for three
years, the interested shareholder has owned at least 80% of the outstanding
shares for five years, the interested shareholder owns at least 90% of the
corporation's outstanding voting shares, or certain consideration is paid to all
shareholders.

The provisions of the Company's Articles and By-Laws, the existence of the
Shareholder Rights Plan and the change of control agreements and the application
of the anti-takeover provisions of the Florida Business Corporation Act could
have the effect of discouraging, delaying or preventing a change of control not
approved by the Board of Directors which could affect the market price of the
Company's Common Stock.

INDEMNIFICATION

The By-Laws of the Company provide that the Company shall indemnify each
director and officer of the Company to the fullest extent permitted by law and
limits the liability of directors to the Company and its stockholders for
monetary damages in certain circumstances.

The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful, (b)
deriving an improper personal benefit from a transaction, (c) voting for or
assenting to an unlawful distribution, and

33
<PAGE> 34

(d) willful misconduct or a conscious disregard for the best interests of the
Registrant in a proceeding by or in the right of the Registrant to procure a
judgment in its favor or in a proceeding by or in the right of a shareholder.
The statute does not affect a director's responsibilities under any other law,
such as the federal securities laws or state or federal environmental laws.

DIVIDEND RESTRICTIONS

The Company's credit facilities currently limit the Company's ability to
pay dividends on the Common Stock to 50% of net after-tax profits for the fiscal
year. The credit agreement's restrictions on the Company's debt-to-equity, quick
and current ratios also affect the Company's ability to pay dividends. The
payment of dividends on the Common Stock is also subject to the preference that
may be applicable to any then outstanding Preferred Stock.

34
<PAGE> 35

UNDERWRITING

The Underwriters named below (the "Underwriters"), have severally agreed,
subject to the terms and conditions in the underwriting agreement (the
"Underwriting Agreement"), by and among the Company, the Selling Stockholders
and the Underwriters, to purchase from the Company and the Selling Stockholders
the number of shares of Common Stock indicated below opposite their respective
names, at the public offering price less the underwriting discount set forth on
the cover page of this Prospectus. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent and
that the Underwriters are committed to purchase all of the shares of Common
Stock, if they purchase any.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
NationsBanc Montgomery Securities, Inc...................... 1,080,000
Morgan Keegan & Company, Inc................................ 810,000
The Robinson-Humphrey Company, LLC.......................... 810,000
---------
Total............................................. 2,700,000
=========
</TABLE>

The Underwriters have advised the Company and the Selling Stockholders that
they propose to offer the Common Stock to the public on the terms set forth on
the cover page of this Prospectus. The Underwriters may allow selected dealers a
concession of not more than $0.62 per share; and the Underwriters may allow, and
such dealers may reallow, a concession of not more than $0.10 per share to
certain other dealers. After the public offering, the public offering price and
other selling terms may be changed by the Underwriters. The Common Stock is
offered subject to receipt and acceptance by the Underwriters, and to certain
other conditions, including the right to reject orders in whole or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus to purchase up to a maximum
of 405,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by the
Underwriters. To the extent that the Underwriters exercise such over-allotment
option, the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.

The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.

The Company, the Selling Stockholders and the Company's officers and
directors who are also stockholders of the Company and who, immediately
following the Offering (assuming no exercise of the Underwriters' over-allotment
option) collectively will beneficially own an aggregate of 3,495,301 outstanding
shares of Common Stock, have agreed, subject to certain exceptions, that for a
period of 180 days after the effective date of the Offering they will not,
without the prior written consent of NationsBanc Montgomery Securities, Inc.,
directly or indirectly, sell, offer, contract or grant an option to sell
(including without limitation any short sale), pledge (other than to a pledgee
who acknowledges to NationsBanc Montgomery Securities, Inc. that it has taken
subject to the lock-up restrictions), transfer, establish an open put equivalent
position or otherwise dispose of any shares of Common Stock, options or warrants
to acquire shares of Common Stock or securities exchangeable or exercisable or
convertible into shares of Common Stock held by them. The Company has also
agreed not to issue, offer, sell, grant options to purchase or otherwise dispose
of any of the Company's equity securities or any other securities convertible
into or exchangeable for its equity securities for a period of 180 days after
the effective date of the Offering without the prior written consent of
NationsBanc Montgomery Securities, Inc., subject to limited exceptions and
grants and exercises of stock options or pursuant to certain acquisitions. In
evaluating any request for a waiver of the lock-up period, the Underwriters will
consider, in accordance with their customary practice, all relevant facts and
circumstances at the time of the request, including, without limitation, the
recent trading market of the Common Stock, the size of the request and, with
respect to a request by the Company to issue additional equity securities, the
purpose of such an issuance.

35
<PAGE> 36

Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offering, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Underwriters may
reduce that short position by purchasing Common Stock in the open market. The
Underwriters may also elect to reduce any short position by exercising all or
part of the over-allotment option described above.

The Underwriters may also impose a penalty bid on certain selling group
members. This means that if the Underwriters purchase shares of Common Stock in
the open market to reduce the Underwriters' short position or to stabilize the
price of the Common Stock, they may reclaim the amount of the selling concession
from the selling group members who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security. Neither the Company nor any of the
Underwriters makes any representation or predictions as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Common Stock. In addition, neither the Company nor any of the
Underwriters makes any representation that the Underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.

The public offering price of the Common Stock was determined by
negotiations among the Underwriters, the Company, and the Selling Stockholders
and was based largely upon the market price for the Common Stock as reported on
the New York Stock Exchange.

CERTAIN LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Chopin, Miller & Yudenfreund, Palm Beach, Florida.
Certain legal matters in connection with the Common Stock offered hereby will be
passed upon for the Underwriters by Piper & Marbury L.L.P., Baltimore, Maryland.

EXPERTS

The consolidated financial statements included herein and incorporated in
this prospectus by reference from the Company's Annual Report on Form 10-K for
the year ended July 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is included herein and
incorporated herein by reference. The financial statements of CCG (consolidated
with those of the Company and not presented separately herein) have been audited
by Nowalk & Associates, independent auditors, as stated in their reports, which
are included herein and incorporated herein by reference. Such financial
statements of the Company and its consolidated subsidiaries have been so
included and incorporated in reliance upon the reports of such firms given upon
their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: Seven World Trade Center, Suite
1300, New York,

36
<PAGE> 37

New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. The Common Stock is listed on the New York Stock
Exchange under the symbol "DY." Reports, proxy and information statements and
other information concerning the Company can also be inspected at the Library of
the New York Stock Exchange at 20 Broad Street, New York, New York 10005. The
Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the site is
http://www.sec.gov.

This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") and does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement and to the exhibits and schedules thereto. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to herein are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and such statement is qualified in its
entirety by such reference. Copies of the Registration Statement may be
inspected, without charge, at the offices of the Commission or obtained at
prescribed rates from the Public Reference Section of the Commission at the
address set forth above.

INFORMATION INCORPORATED BY REFERENCE

The following documents, previously filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated herein by reference:

(i) The Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1997, filed October 1, 1997;

(ii) the Company's Annual Report on Form 10-K/A for the fiscal year
ended July 31, 1997, filed October 28, 1997;

(iii) the Company's Current Report on Form 8-K, filed August 13, 1997;
and

(iv) the Company's Current Report on Form 8-K, filed October 16, 1997.

Each document filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering to which this Prospectus
relates, shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date any such document is filed. Any statements
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein (or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein) specifically modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus except as so modified or superseded.

The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon written or oral request
of such person to Corporate Secretary, Dycom Industries, Inc., First Union
Center, 4440 PGA Boulevard, Suite 600, Palm Beach Gardens, Florida 33410, (561)
627-7171, a copy of any or all of the documents described above (other than
exhibits to such documents) that have been incorporated by reference in this
Prospectus.

37
<PAGE> 38

DYCOM INDUSTRIES, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Consolidated Financial Statements for the three years ended
July 31, 1997
Report of Independent Auditors............................ F-2
Consolidated Balance Sheets as of July 31, 1996 and
1997................................................... F-5
Consolidated Statements of Operations for the years ended
July 31, 1995, 1996 and 1997........................... F-6
Consolidated Statements of Stockholders' Equity for the
years ended July 31, 1995, 1996 and 1997............... F-7
Consolidated Statements of Cash Flows for the years ended
July 31, 1995, 1996 and 1997........................... F-8
Notes to Consolidated Financial Statements................ F-9
</TABLE>

F-1
<PAGE> 39

INDEPENDENT AUDITORS' REPORT

Dycom Industries, Inc.

We have audited the consolidated balance sheets of Dycom Industries, Inc.
and subsidiaries (the "Company") as of July 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended July 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits. The consolidated financial statements give retroactive effect to the
merger of Communications Construction Group, Inc., which has been accounted for
as a pooling of interests as described in Note 2 to the consolidated financial
statements. We did not audit the balance sheet of Communications Construction
Group, Inc. as of May 31, 1996 or the statements of operations, stockholders'
equity, and cash flows of Communications Construction Group, Inc. for the years
ended May 31, 1997, 1996 and 1995, which statements reflect total assets of
$14,121,468 as of May 31, 1996, and total revenues of $67,717,326, $50,121,009
and $43,047,102 for the years ended May 31, 1997, 1996 and 1995, respectively.
Those financial statements were audited by other auditors whose reports have
been furnished to us, and our opinion, insofar as it relates to the amounts
included for Communications Construction Group, Inc. for such periods, is based
solely on the reports of such other auditors. As described in Note 2 to the
consolidated financial statements, subsequent to the issuance of the reports of
the other auditors, Communications Construction Group, Inc. changed its fiscal
year to conform to the fiscal year of Dycom Industries, Inc. for the period
ended July 31, 1997.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Dycom Industries, Inc. and
subsidiaries as of July 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended July 31,
1997 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Certified Public Accountants
West Palm Beach, Florida
September 26, 1997

F-2
<PAGE> 40

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Communications Construction Group, Inc.

We have audited the accompanying consolidated balance sheets of
Communications Construction Group, Inc. (the "Company") as of May 31, 1997 and
1996, and the related consolidated statements of operations, cash flows and
changes in stockholders' equity for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above (not presented
separately herein) present fairly, in all material respects, the consolidated
financial position of Communications Construction Group, Inc. as of May 31, 1997
and 1996, and the consolidated results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.

NOWALK & ASSOCIATES

Nowalk & Associates
Cranbury, New Jersey
July 23, 1997

F-3
<PAGE> 41

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Communications Construction Group, Inc.

We have audited the accompanying consolidated balance sheets of
Communications Construction Group, Inc. (the "Company") as of May 31, 1996 and
1995, and the related consolidated statements of operations, cash flows and
changes in stockholders' equity for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above (not presented
separately herein) present fairly, in all material respects, the consolidated
financial position of Communications Construction Group, Inc. as of May 31, 1996
and 1995, and the consolidated results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.

NOWALK & ASSOCIATES

Nowalk & Associates
Cranbury, New Jersey
August 29, 1996
As to Notes 5 and 6, January 3, 1997

F-4
<PAGE> 42

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
JULY 31, 1996 AND 1997

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents........................................ $ 3,927,736 $ 6,645,972
Accounts receivable, net.................................... 21,747,268 34,353,367
Costs and estimated earnings in excess of billings.......... 7,519,284 10,479,974
Deferred tax assets, net.................................... 1,261,065 2,168,763
Other current assets........................................ 1,291,249 1,550,545
----------- -----------
Total current assets.............................. 35,746,602 55,198,621
----------- -----------
PROPERTY AND EQUIPMENT, net................................. 24,514,470 27,543,238
----------- -----------
OTHER ASSETS:
Intangible assets, net...................................... 4,839,447 4,684,358
Deferred tax assets......................................... 704,887 424,205
Other....................................................... 389,947 311,473
----------- -----------
Total other assets................................ 5,934,281 5,420,036
----------- -----------
TOTAL............................................. $66,195,353 $88,161,895
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable............................................ $ 5,567,512 $10,281,615
Notes payable............................................... 7,257,867 13,080,316
Billings in excess of costs and estimated earnings.......... 38,714 470,940
Accrued self-insured claims................................. 3,064,229 2,011,622
Income taxes payable........................................ 1,099,178 1,230,376
Other accrued liabilities................................... 10,496,020 11,904,304
----------- -----------
Total current liabilities......................... 27,523,520 38,979,173
NOTES PAYABLE............................................... 10,427,837 9,012,066
ACCRUED SELF-INSURED CLAIMS................................. 7,062,150 6,418,400
----------- -----------
Total liabilities................................. $45,013,507 $54,409,639
----------- -----------
COMMITMENTS AND CONTINGENCIES, Note 15
STOCKHOLDERS' EQUITY:
Common stock, par value $.33 1/3 per share: 50,000,000
shares authorized; 10,654,734 and 10,867,877 issued and
outstanding, respectively................................. $ 3,551,578 $ 3,622,625
Additional paid-in capital.................................. 24,582,832 25,421,701
Retained earnings (deficit)................................. (6,952,564) 4,707,930
----------- -----------
Total stockholders' equity........................ 21,181,846 33,752,256
----------- -----------
TOTAL............................................. $66,195,353 $88,161,895
=========== ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 43

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JULY 31, 1995, 1996, AND 1997

<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Contract revenues earned............................. $186,956,976 $194,053,617 $242,957,932
Other, net........................................... 1,376,398 1,206,624 965,549
------------ ------------ ------------
Total...................................... 188,333,374 195,260,241 243,923,481
------------ ------------ ------------
EXPENSES:
Cost of earned revenues excluding depreciation....... 153,284,320 155,769,390 192,412,439
General and administrative........................... 19,009,530 20,485,022 23,779,913
Depreciation and amortization........................ 7,165,252 7,624,395 8,689,611
------------ ------------ ------------
Total...................................... 179,459,102 183,878,807 224,881,963
------------ ------------ ------------
INCOME BEFORE INCOME TAXES........................... 8,874,272 11,381,434 19,041,518
------------ ------------ ------------
PROVISION (BENEFIT) FOR INCOME TAXES
Current............................................ 3,732,893 5,297,772 8,018,951
Deferred........................................... (1,580,196) (196,241)
------------ ------------ ------------
Total...................................... 3,732,893 3,717,576 7,822,710
------------ ------------ ------------
NET INCOME........................................... $ 5,141,379 $ 7,663,858 $ 11,218,808
============ ============ ============
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Primary............................................ $ 0.49 $ 0.71 $ 1.02
============ ============ ============
Fully diluted...................................... $ 0.49 $ 0.70 $ 1.02
============ ============ ============
SHARES USED IN COMPUTING EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary............................................ 10,588,766 10,859,819 10,948,689
============ ============ ============
Fully diluted...................................... 10,588,766 10,928,284 10,994,500
============ ============ ============
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 44

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JULY 31, 1995, 1996, AND 1997

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
----------------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT)
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Balances at July 31, 1994, as previously
reported................................... 8,528,990 $2,842,997 $24,253,309 $(20,387,411)
Acquisition accounted for as pooling of
interests.................................. 2,053,242 684,414 109,563 629,610
---------- ---------- ----------- ------------
Balances at July 31, 1994.................... 10,582,232 3,527,411 24,362,872 (19,757,801)
Stock options exercised...................... 15,000 5,000 40,000
Net income................................... 5,141,379
---------- ---------- ----------- ------------
Balances at July 31, 1995.................... 10,597,232 3,532,411 24,402,872 (14,616,422)
Stock options exercised...................... 57,502 19,167 179,960
Net income................................... 7,663,858
---------- ---------- ----------- ------------
Balances at July 31, 1996.................... 10,654,734 3,551,578 24,582,832 (6,952,564)
Stock options exercised...................... 213,143 71,047 706,300
Income tax benefit from stock options
exercised.................................. 132,569
Adjustment for change in fiscal year of
pooled company............................. 441,686
Net income................................... 11,218,808
---------- ---------- ----------- ------------
Balances at July 31, 1997.................... 10,867,877 $3,622,625 $25,421,701 $ 4,707,930
========== ========== =========== ============
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE> 45

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 1995, 1996, AND 1997

<TABLE>
<CAPTION>
1995 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Equivalents from:
OPERATING ACTIVITIES:
Net income............................................ $ 5,141,379 $ 7,663,858 $ 11,218,808
Adjustments to reconcile net cash provided by
operating activities:
Depreciation and amortization....................... 7,165,252 7,624,395 8,689,611
Gain on disposal of assets.......................... (840,637) (763,104) (667,377)
Deferred income taxes............................... (1,580,196) (196,241)
Changes in assets and liabilities:
Accounts receivable, net............................ (1,900,640) 2,842,893 (10,861,852)
Unbilled revenues, net.............................. (1,300,412) (2,286,096) (2,429,995)
Other current assets................................ (18,790) 205,641 (785,024)
Other assets........................................ 123,780 49,570 93,350
Accounts payable.................................... 2,042,901 (2,767,120) 3,782,196
Accrued self-insured claims and other liabilities... 1,623,897 2,703,422 323,789
Accrued income taxes................................ 250,189 85,227 636,427
----------- ------------ ------------
Net cash inflow from operating activities............. 12,286,919 13,778,490 9,803,692
----------- ------------ ------------
INVESTING ACTIVITIES:
Capital expenditures................................ (8,704,641) (10,684,195) (12,063,723)
Proceeds from sale of assets........................ 2,569,307 2,195,774 1,685,069
----------- ------------ ------------
Net cash outflow from investing activities............ (6,135,334) (8,488,421) (10,378,654)
----------- ------------ ------------
FINANCING ACTIVITIES:
Borrowings on notes payable and bank
lines-of-credit.................................. 1,504,982 1,690,917 17,321,661
Principal payments on notes payable and bank
lines-of-credit.................................. (5,944,358) (7,671,189) (14,646,255)
Exercise of stock options........................... 45,000 199,127 777,347
----------- ------------ ------------
Net cash inflow (outflow) from financing activities... (4,394,376) (5,781,145) 3,452,753
----------- ------------ ------------
Net cash outflow related to change in fiscal year of
pooled company...................................... (159,555)
----------- ------------ ------------
NET CASH INFLOW (OUTFLOW) FROM ALL ACTIVITIES......... 1,757,209 (491,076) 2,718,236
CASH AND EQUIVALENTS AT BEGINNING OF YEAR............. 2,661,603 4,418,812 3,927,736
----------- ------------ ------------
CASH AND EQUIVALENTS AT END OF YEAR................... $ 4,418,812 $ 3,927,736 $ 6,645,972
=========== ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NONCASH
INVESTING AND FINANCING ACTIVITIES:
Cash paid during the period for:
Interest............................................ $ 2,493,381 $ 2,023,159 $ 1,798,093
Income taxes........................................ 3,411,785 5,364,539 8,158,759
Property and equipment acquired and financed with:
Capital lease obligations........................... $ 360,242 $ 135,341 $ 601,024
Income tax benefit from stock options exercised....... $ 132,569
</TABLE>

See notes to consolidated financial statements.

F-8
<PAGE> 46

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include Dycom Industries, Inc. ("Dycom" or the "Company") and its subsidiaries,
all of which are wholly owned. On July 29, 1997, Communications Construction
Group, Inc. ("CCG") was merged with and into the Company through an exchange of
common stock. The merger was accounted for as a pooling of interests.
Accordingly, the Company's consolidated financial statements include the results
of CCG for all periods presented. See Note 2.

The Company's operations consist primarily of telecommunication and
electric utility services contracting. All material intercompany accounts and
transactions have been eliminated.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates and such differences may be material to the financial statements.

Estimates are used in the Company's revenue recognition of work-in-process,
allowance for doubtful accounts, self-insured claims liability, deferred tax
asset valuation allowance, depreciation and amortization, and in the estimated
lives of assets, including intangibles.

REVENUE -- Income on long-term contracts is recognized on the
percentage-of-completion method based primarily on the ratio of contract costs
incurred to date to total estimated contract costs. As some of these contracts
extend over one or more years, revisions in cost and profit estimates during the
course of the work are reflected in the accounting period as the facts that
require the revision become known. At the time a loss on a contract becomes
known, the entire amount of the estimated ultimate loss is accrued. Income on
short-term unit contracts is recognized as the related work is completed.
Work-in-process on unit contracts is based on management's estimate of work
performed but not billed.

"Costs and estimated earnings in excess of billings" represents the excess
of contract revenues recognized under the percentage-of-completion method of
accounting for long-term contracts and work-in-process on unit contracts over
billings to date. For those contracts in which billings exceed contract revenues
recognized to date, such excesses are included in the caption "billings in
excess of costs and estimated earnings".

CASH AND EQUIVALENTS -- Cash and equivalents include cash balances in
excess of daily requirements which are invested in overnight repurchase
agreements, certificates of deposits, and various other financial instruments
having an original maturity of three months or less. For purposes of the
consolidated statements of cash flows, the Company considers these amounts to be
cash equivalents. The carrying amount reported in the balance sheet for cash and
equivalents approximates its fair value.

PROPERTY AND EQUIPMENT -- Property and equipment is stated at cost, reduced
in certain cases by valuation reserves. Depreciation and amortization is
computed over the estimated useful life of the assets utilizing the
straight-line method. The estimated useful service lives of the assets are:
buildings -- 20-31 years; leasehold improvements -- the term of the respective
lease or the estimated useful life of the improvements, whichever is shorter;
vehicles -- 3-7 years; equipment and machinery -- 3-10 years; and furniture and
fixtures -- 3-10 years. Maintenance and repairs are expensed as incurred;
expenditures that enhance the value of the property or extend its useful life
are capitalized. When assets are sold or retired, the cost and related
accumulated depreciation are removed from the accounts and the resulting gain or
loss is included in income.

INTANGIBLE ASSETS -- The excess of the purchase price over the fair market
value of the tangible net assets of acquired businesses (goodwill) is amortized
on the straight-line method over 40 years. The appropriateness of the carrying
value of goodwill is reviewed periodically by the Company at the subsidiary
level. An impairment loss is recognized when the projected future cash flows is
less than the carrying value of goodwill.

F-9
<PAGE> 47

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Amortization expense was $155,088 for each of the fiscal years ended July
31, 1995, 1996, and 1997, respectively. The intangible assets are net of
accumulated amortization of $996,270 and $1,151,358 at July 31, 1996 and 1997,
respectively.

LONG-LIVED ASSETS -- In March 1995, the Financial Accounting Standards
Board ("FASB") issued the Statement of Financial Accounting Standards ("SFAS")
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". SFAS No. 121 requires that the long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events and
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted the provisions of SFAS No. 121 effective August
1, 1996 and has determined that no impairment loss need be recognized.

SELF-INSURED CLAIMS LIABILITY -- The Company is primarily self-insured, up
to certain limits, for automobile and general liability, workers' compensation,
and employee group health claims. A liability for unpaid claims and the
associated claim expenses, including incurred but not reported losses, is
actuarially determined and reflected in the consolidated financial statements as
an accrued liability. The self-insured claims liability includes incurred but
not reported losses of $4,458,000 and $4,429,000 at July 31, 1996 and 1997,
respectively. The determination of such claims and expenses and the
appropriateness of the related liability is continually reviewed and updated.

INCOME TAXES -- The Company and its subsidiaries, except for CCG, file a
consolidated federal income tax return. CCG will be included in the Company's
consolidated federal income tax return commencing in fiscal year 1998. Deferred
income taxes are provided for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities.

PER SHARE DATA -- Earnings per common and common equivalent share are
computed using the weighted average shares of common stock outstanding plus the
common stock equivalents arising from the effect of dilutive stock options,
using the treasury stock method. See Note 12.

CHANGE IN ACCOUNTING PRINCIPLE -- In October 1995, the FASB issued SFAS No.
123 "Accounting for Stock Based Compensation," which was effective for the
Company beginning August 1, 1996. SFAS No. 123 requires expanded disclosures of
stock based compensation arrangements with employees and encourages, but does
not require, compensation cost to be measured based on the fair value of the
equity instrument awarded. Under SFAS No. 123, companies are permitted, however,
to continue to apply Accounting Principle Board ("APB") Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to its
stock based compensation awards to employees and will disclose in the annual
financial statements the required pro forma effect on net income and earnings
per share. See Note 12.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -- In February 1997, the FASB
issued SFAS No. 128 "Earnings per Share" which changes the method of calculating
earnings per share and is effective for fiscal years ending after December 15,
1997. SFAS No. 128 requires the presentation of "basic" earnings per share and
"diluted" earnings per share on the face of the income statement. Basic earnings
per share is computed by dividing the net income available to common
shareholders by the weighted average shares of outstanding common stock. The
calculation of diluted earnings per share is similar to basic earnings per share
except the denominator includes dilutive common stock equivalents such as stock
options and warrants. The Company will adopt SFAS No. 128 in fiscal 1998 as
early adoption is not permitted. The calculation of earnings per share under
SFAS No. 128 is not expected to be materially different than the

F-10
<PAGE> 48

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

current calculation of earnings per share. The pro forma basic earnings per
share and diluted earnings per share calculated in accordance with SFAS 128 for
the years ended July 31, are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Pro forma basic earnings per share.......................... $0.49 $0.72 $1.04
Pro forma diluted earnings per share........................ $0.49 $0.71 $1.02
</TABLE>

In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income"
which establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. This statement requires that an enterprise
classify items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a statement of financial position. This statement is effective for
fiscal years beginning after December 15, 1997.

In June 1997, the FASB issued SFAS No. 131 "Disclosure about Segments of an
Enterprise and Related Information" which establishes standards for public
business enterprises to report information about operating segments in annual
financial statements and requires those enterprises to report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes the standards for related disclosures about
products and services, geographic areas, and major customers. This statement
requires that a public business enterprise report financial and descriptive
information about its reportable operating segments. The financial information
is required to be reported on the basis that it is used internally for
evaluating segment performance and deciding how to allocate resources to
segments. Operating segments are components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. This statement is effective for financial statements for
periods beginning after December 15, 1997.

Management is currently evaluating the requirements of SFAS No.130 and No.
131, respectively.

2. ACQUISITION

On July 29, 1997, the Company consummated the Communications Construction
Group, Inc.("CCG") acquisition by merger. The Company issued 2,053,242 shares of
common stock in exchange for all the outstanding capital stock of CCG. Dycom has
accounted for the acquisition as a pooling of interests and, accordingly, the
Company's historical financial statements include the results of CCG for all
periods presented.

Prior to the acquisition, CCG used a fiscal year ending May 31 and as of
July 31 1997 adopted Dycom's fiscal year. The Company's consolidated statements
of operations for years ending July 31, 1995, 1996, and 1997 combines the
statements of operations of CCG for its fiscal years ending May 31, 1995, 1996,
and 1997, respectively. The Company's consolidated balance sheet at July 31,
1996 includes the CCG balance sheet as of May 31, 1996. The total revenue and
net income of CCG for the two-month period ended July 31, 1997 were $13.1
million and $0.4 million, respectively, with the net income reflected as an
adjustment to retained earnings as of July 31, 1997.

F-11
<PAGE> 49

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The combined and separate company results of Dycom and CCG for the fiscal
years ended July 31 and May 31, 1995, 1996, and 1997 are as follows:

<TABLE>
<CAPTION>
DYCOM CCG
JULY 31, MAY 31, COMBINED
------------ ----------- ------------
<S> <C> <C> <C>
Fiscal year 1995:
Total revenues.............................. $145,283,116 $43,050,258 $188,333,374
Net income.................................. $ 4,433,204 $ 708,175 $ 5,141,379
Fiscal year 1996:
Total revenues.............................. $145,135,380 $50,124,861 $195,260,241
Net income.................................. $ 6,390,144 $ 1,273,714 $ 7,663,858
Fiscal year 1997:
Total revenues.............................. $176,204,581 $67,718,900 $243,923,481
Net income.................................. $ 8,268,502 $ 2,950,306 $ 11,218,808
</TABLE>

The direct transaction costs resulting from the merger were $0.4 million.
These costs, which include filing fees with regulatory agencies, legal,
accounting and other professional costs, were charged to the combined operations
for the fiscal year ended July 31, 1997.

3. ACCOUNTS RECEIVABLE

Accounts receivable at July 31 consist of the following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Contract billings........................................... $20,393,361 $32,586,289
Retainage................................................... 1,432,545 1,885,656
Other receivables........................................... 527,405 896,015
----------- -----------
Total............................................. 22,353,311 35,367,960
Less allowance for doubtful accounts........................ 606,043 1,014,593
----------- -----------
Accounts receivable, net.................................... $21,747,268 $34,353,367
=========== ===========
</TABLE>

4. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS

The accompanying consolidated balance sheets include costs and estimated
earnings on contracts in progress, net of progress billings as follows:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Costs incurred on contracts in progress..................... $24,553,658 $16,894,451
Estimated earnings thereon.................................. 436,154 3,222,120
----------- -----------
24,989,812 20,116,571
Less billings to date....................................... 17,509,242 10,107,537
----------- -----------
$ 7,480,570 $10,009,034
=========== ===========
Included in the accompanying consolidated balance sheets
under the captions:
Costs and estimated earnings in excess of billings........ $ 7,519,284 $10,479,974
Billings in excess of costs and estimated earnings........ (38,714) (470,940)
----------- -----------
$ 7,480,570 $10,009,034
=========== ===========
</TABLE>

F-12
<PAGE> 50

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT

The accompanying consolidated balance sheets include the following property
and equipment:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Land........................................................ $ 1,711,464 $ 1,942,247
Buildings................................................... 2,236,322 2,346,993
Leasehold improvements...................................... 1,078,939 1,356,861
Vehicles.................................................... 28,385,347 32,232,343
Equipment and machinery..................................... 22,534,900 23,674,176
Furniture and fixtures...................................... 3,738,944 5,011,660
----------- -----------
Total............................................. 59,685,916 66,564,280
Less accumulated depreciation and amortization.............. 35,171,446 39,021,042
----------- -----------
Property and equipment, net................................. $24,514,470 $27,543,238
=========== ===========
</TABLE>

During fiscal 1996 and 1997, certain subsidiaries of the Company entered
into lease arrangements accounted for as capitalized leases. The carrying value
of capital leases at July 31, 1996 and 1997 was $372,170 and $838,137,
respectively, net of accumulated amortization of $874,937 and $881,336,
respectively. Capital leases are included as a component of equipment and
machinery.

Maintenance and repairs of property and equipment amounted to $6,142,484,
$6,280,575, and $6,116,397 for the fiscal years ended July 31, 1995, 1996, and
1997, respectively.

6. OTHER ACCRUED LIABILITIES

Other accrued liabilities at July 31 consist of the following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Accrued payroll and related taxes........................... $ 2,618,266 $ 3,281,376
Accrued employee benefit costs.............................. 2,385,969 3,406,400
Accrued construction costs.................................. 2,178,785 2,033,371
Accrued other liabilities................................... 3,313,000 3,183,157
----------- -----------
Other accrued liabilities................................... $10,496,020 $11,904,304
=========== ===========
</TABLE>

7. NOTES PAYABLE

Notes payable at July 31 are summarized by type of borrowing as follows:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Bank Credit Agreements
Revolving credit facilities............................... $12,985,119 $10,113,484
Term-loan................................................. 2,162,812 8,550,000
Equipment term-loans...................................... 704,168 1,907,216
Capital lease obligations................................... 344,445 722,927
Equipment loans............................................. 852,083 798,755
Other....................................................... 637,077
----------- -----------
Total............................................. 17,685,704 22,092,382
Less current portion........................................ 7,257,867 13,080,316
----------- -----------
Notes payable -- non-current................................ $10,427,837 $ 9,012,066
=========== ===========
</TABLE>

F-13
<PAGE> 51

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On April 28, 1997 the Company signed a new $35.0 million credit agreement
with a group of banks. The new credit facility provides for (i) a five-year
term-loan in the principal amount of $9.0 million used to refinance the
Company's previously existing bank credit facility, (ii) a $6.0 million
revolving equipment facility used to refinance existing equipment term-loans and
to provide financing for Company's future equipment requirements, (iii) a $10.0
million revolving credit facility used for financing working capital, and (iv) a
$10.0 million standby letter of credit facility issued as security to the
Company's insurance administrators as part of its self-insurance program. The
revolving credit facility, the revolving equipment facility and the standby
letter of credit facility are available for a one-year period.

The outstanding principal under the term-loan bears interest at the prime
interest rate minus 0.50% (8.00% at July 31, 1997). Principal and interest is
payable in quarterly installments through April 2002. The loans outstanding
under the revolving credit facility and the revolving equipment facility bear
interest, at the option of the Company, at the prime interest rate minus 1.0% or
LIBOR plus 1.50% and at the prime interest minus 0.75% or LIBOR plus 1.75%,
respectively. At July 31, 1997, the interest rates on the outstanding revolving
credit facility and revolving equipment facility loans were at the LIBOR options
or 7.56% and 7.81%, respectively. At July 31, 1997, the outstanding amounts
under the term-loan and the revolving credit facility were $8.6 million and $4.2
million, respectively.

The advances under the revolving equipment facility are converted to
term-loans with maturities not to exceed 48 months. The outstanding principal on
the equipment term-loans is payable in monthly installments through January
2001. During the quarter ended April 30, 1997, the Company borrowed $1.2 million
to refinance the then existing equipment term-loans and an additional $0.8
million for current equipment requirements. At July 31, 1997, the outstanding
amount owed under the revolving equipment facility was $1.9 million.

At July 31, 1997, the Company had outstanding $9.2 million in standby
letters of credit issued to the Company's insurance administrators as part of
its self-insurance program.

The new bank credit arrangement contains restrictions which, among other
things, require maintenance of certain financial ratios and covenants, restricts
encumbrances of assets and creation of indebtedness, and limits the payment of
cash dividends. Cash dividends are limited to 50% of each fiscal year's
after-tax profits. No cash dividends have been paid during fiscal 1997. The
credit facility is secured by the Company's assets. At July 31, 1997, the
Company was in compliance with all the financial covenants and conditions.

The Company's newly acquired subsidiary, CCG, maintains a $6.6 million
revolving bank credit facility. The interest rate on this facility is at the
bank's prime interest rate plus 0.75% and is collateralized by 75% of the
eligible trade accounts receivable, inventory, and certain real property owned
by a partnership, whose general partners are the former shareholders of CCG. In
addition, the former shareholders of CCG are personal guarantors of this
facility. The facility contains certain financial conditions and covenants
including limitation on the amount of capital expenditures and the creation of
additional indebtedness. During 1997, certain financial covenants were breached
and the bank waived such violations. At July 31, 1997, CCG was in compliance
with the bank credit facility covenants and conditions. The outstanding
principal balance was $5.9 million at July 31, 1997. This facility was an
existing arrangement made by CCG prior to the acquisition by Dycom.

In addition to the borrowings under the bank credit agreement, certain
subsidiaries have outstanding obligations under capital leases and other
equipment financing arrangements. These obligations are payable in monthly
installments expiring at various dates through December 2001.

The estimated aggregate annual principal repayments for notes payable and
capital lease obligations in the next five years are $13,080,316 in 1998,
$2,869,834 in 1999, $2,592,735 in 2000, $2,160,155 in 2001, and $1,389,342 in
2002.

F-14
<PAGE> 52

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Interest costs incurred on notes payable, all of which is expensed, for the
years ended July 31, 1995, 1996, and 1997 were $2,348,574, $1,916,389, and
$1,899,570, respectively. Such amounts are included in general and
administrative expenses in the accompanying consolidated statements of
operations.

The interest rates on notes payable under the bank credit agreement are at
current rates and, therefore, the carrying amount approximates fair value.

8. INCOME TAXES

The components of the provision (benefit) for income taxes are:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal.......................................... $3,027,160 $4,265,617 $6,248,234
State............................................ 705,733 1,032,155 1,770,717
---------- ---------- ----------
3,732,893 5,297,772 8,018,951
---------- ---------- ----------
Deferred:
Federal.......................................... (74,145) (522,169) 191,765
State............................................ (134,700)
Valuation allowance.............................. 74,145 (1,058,027) (253,306)
---------- ---------- ----------
(1,580,196) (196,241)
---------- ---------- ----------
Total tax provision...................... $3,732,893 $3,717,576 $7,822,710
========== ========== ==========
</TABLE>

The deferred tax provision (benefit) is the change in the deferred tax
assets and liabilities representing the tax consequences of changes in the
amount of temporary differences and changes in tax rates during the year. The
change in the deferred tax assets and liabilities of CCG for the two-months
ended July 31, 1997 is included in the Company's retained earnings as the
adjustment for the change in fiscal year of pooled company. The deferred tax
assets and liabilities at July 31 are comprised of the following:

<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Self-insurance, warranty, and other non-deductible
reserves............................................... $4,008,715 $3,943,356
Allowance for doubtful accounts........................... 172,340 346,993
Small tools............................................... 348,067
---------- ----------
4,181,055 4,638,416
Valuation allowance....................................... (728,491) (475,185)
---------- ----------
$3,452,564 $4,163,231
========== ==========
Deferred tax liabilities:
Property and equipment.................................... $1,275,314 $1,357,721
Unamortized acquisition costs............................. 211,298 212,542
---------- ----------
$1,486,612 $1,570,263
========== ==========
Net deferred tax assets..................................... $1,965,952 $2,592,968
========== ==========
</TABLE>

A valuation allowance is provided when it is more likely than not that some
portion of the Company's deferred tax assets will not be realized. In fiscal
1996 and 1997, the Company reduced the valuation allowance by $1.1 million and
$0.3 million, respectively. The valuation allowance recorded in the financial
statements reduces deferred tax assets to an amount that represents management's
best estimate of the amount of deferred tax assets that more likely than not
will be realized. Management's estimate and conclusion is based

F-15
<PAGE> 53

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

on the available evidence supporting the reversing deductible temporary
differences being offset by reversing taxable temporary differences and the
existence of sufficient taxable income within the current carryback periods.

The difference between the total tax provision and the amount computed by
applying the statutory federal income tax rates to pre-tax income is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ----------- ----------
<S> <C> <C> <C>
Statutory rate applied to pre-tax income.......... $3,017,252 $ 3,869,688 $6,664,531
State taxes, net of federal tax benefit........... 465,784 681,836 1,059,178
Amortization and write-off of intangible assets,
with no tax benefit............................. 52,730 52,730 52,730
Tax effect of non-deductible items................ 169,161 139,101 374,564
Valuation allowance............................... 74,145 (1,058,027) (253,306)
Other items, net.................................. (46,179) 32,248 (74,987)
---------- ----------- ----------
Total tax provision..................... $3,732,893 $ 3,717,576 $7,822,710
========== =========== ==========
</TABLE>

The Internal Revenue Service (the "IRS")has examined and closed the
Company's consolidated federal income tax returns for all years through fiscal
1990. The Company has settled all assessments of additional taxes and believes
that it has made adequate provision for income taxes that may become payable
with respect to open tax years. The IRS has examined and closed the income tax
returns for years through 1994 for CCG.

On August 5, 1997, The Taxpayer Relief Act of 1997 (the "Act") was signed
into law. The Act will not have a material effect on the Company's consolidated
financial statements.

9. REVENUES -- OTHER

The components of other revenues are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- --------
<S> <C> <C> <C>
Interest income..................................... $ 266,392 $ 264,551 $190,181
Gain on sale of fixed assets........................ 840,637 763,104 667,377
Miscellaneous income................................ 269,369 178,969 107,991
---------- ---------- --------
Total other revenues, net........................... $1,376,398 $1,206,624 $965,549
========== ========== ========
</TABLE>

10. CAPITAL STOCK

On June 1, 1992, the Company approved a Shareholder Rights Plan. All
shareholders of record on June 15, 1992 were issued a Right for each outstanding
share of the Company's common stock. Each Right entitles the holder to purchase
one-half share of common stock for an exercise price of $18 subject to
adjustment. The Right is exercisable only when a triggering event occurs. The
triggering events, among others, are a person or group's (1) acquisition of 20%
or more of Dycom's common stock, (2) commencement of a tender offer which would
result in the person or group owning 20% or more of Dycom's common stock, or (3)
acquisition of at least 10% of Dycom's common stock and such acquisition is
determined to have effects adverse to the Company. The Company can redeem the
Rights at $0.01 per Right at any time prior to ten days after a triggering event
occurs.

Certain officers of the Company have change of control agreements with
Dycom, which provide extraordinary compensation upon the change of control of
the Company. The payments pursuant to these agreements would be triggered by any
person's acquisition of more than 50% of the Company's outstanding

F-16
<PAGE> 54

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

securities, the sale or transfer of substantially all of Dycom's assets to
someone other than a wholly-owned subsidiary of the Company, or a change of
control of the Board of Directors.

At July 31, 1997, the Company has authorized 1,000,000 shares of preferred
stock, par value $1.00, of which no shares are issued and outstanding.

11. EMPLOYEE BENEFIT PLAN

The Company sponsors defined contribution plans that provide retirement
benefits to all employees that elect to participate. Under the plans,
participating employees may defer up to 15% of their base pre-tax compensation.
The Company's contributions to the plans are discretionary. The Company's
discretionary contributions were $60,039, $100,000 and $230,000 in fiscal years
1995, 1996, and 1997, respectively.

12. STOCK OPTION PLANS

The Company has reserved 900,000 shares of common stock under its 1991
Incentive Stock Option Plan (the "1991 Plan") which was approved by the
shareholders on November 25, 1991. The Plan provides for the granting of options
to key employees until it expires in 2001. Options are granted at the fair
market value on the date of grant and are exercisable over a period of up to
five years. Since the Plan's adoption, certain of the options granted have
lapsed as a result of employees terminating their employment with the Company.
At July 31, 1995, 1996, and 1997, options available for grant under the 1991
Plan were 403,419 shares, 427,353 shares, and 384,118 shares, respectively.

On August 25, 1997, the Company granted to key employees under the 1991
Plan options to purchase an aggregate of 192,059 shares of common stock. The
options were granted at $18.25, the fair market value on the date of grant.

The Company's previous Incentive Stock Option Plan (the "1981 Plan")
expired on December 31, 1991. No further grants will be made under the 1981
Plan, and all outstanding options expired during the first quarter of fiscal
1996.

In addition to the stock option plans discussed above, the Company has
agreements outside of the plans with the non-employee members of the Board of
Directors (the "Directors Plan"). On January 10, 1994, the Company granted to
the non-employee Directors, non-qualified options to purchase an aggregate of
60,000 shares of common stock. The options were granted at $3.875, the fair
market value on the date of grant, with vesting over a three-year period.

F-17
<PAGE> 55

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the stock option transactions under the 1991
Plan, the 1981 Plan, and the Directors Plan for the three years ended July 31,
1995, 1996, and 1997:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Options outstanding at July 31, 1994........................ 504,498 $ 4.78
Granted................................................... 161,300 $ 5.09
Terminated................................................ (106,625) $ 7.73
Exercised................................................. (15,000) $ 3.00
-------- ------
Options outstanding at July 31, 1995........................ 544,173 $ 4.29
Terminated................................................ (50,526) $ 7.43
Exercised................................................. (57,502) $ 3.46
-------- ------
Options outstanding at July 31, 1996........................ 436,145 $ 4.54
Granted................................................... 100,000 $13.50
Terminated................................................ (56,765) $ 4.57
Exercised................................................. (213,143) $ 4.02
-------- ------
Options outstanding at July 31, 1997........................ 266,237 $10.32
-------- ------
Exercisable options at
July 31, 1995............................................. 138,069 $ 4.92
July 31, 1996............................................. 190,817 $ 3.78
July 31, 1997............................................. 69,933 $ 5.21
-------- ------
</TABLE>

The range of exercise prices for options outstanding at July 31, 1997 was
$2.75 to $13.50. The range of exercise prices for options is wide due primarily
to the increasing price of the Company's stock over the period of the grants.

The following summarizes information about options outstanding at July 31,
1997:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
----------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER OF CONTRACTUAL EXERCISE
SHARES LIFE PRICE
--------- ----------- --------
<S> <C> <C> <C>
Range of exercise prices
$ 2.00 to $ 4.00...................................... 107,357 5.3 3.44
$ 6.00 to $ 8.00...................................... 64,000 3.0 6.75
$12.00 to $14.00...................................... 94,880 4.1 13.50
------- --- ------
266,237 4.5 $10.32
======= === ======
</TABLE>

<TABLE>
<CAPTION>
EXERCISABLE OPTIONS
------------------------
WEIGHTED
EXERCISABLE AVERAGE
AS OF EXERCISE
JULY 31, 1997 PRICE
------------- --------
<S> <C> <C>
Range of exercise prices
$2.00 to $4.00............................................ 44,683 $3.58
$6.00 to $8.00............................................ 25,250 $6.75
------ -----
69,933 $5.21
====== =====
</TABLE>

F-18
<PAGE> 56

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

These options will expire if not exercised at specific dates ranging from
November 1997 to August 2001. The prices for the options exercised during the
three years ended July 31, 1997 ranged from $2.75 to $6.75.

As discussed in Note 1, the Company has adopted the disclosure-only
provisions of SFAS No. 123. The fair value of the options granted in fiscal 1997
has been estimated at the date of grant using the Black-Scholes option-pricing
model with the following assumptions: expected stock volatility of 58.97%,
risk-free interest rate of 6.57%, expected lives of 4 years, and no dividend
yield, due to the Company's recent history of not paying cash dividends. The
Company did not grant stock options in fiscal 1996.

The Black-Scholes option valuation model was developed for estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. Because option valuation models require the use of subjective
assumptions and changes in these assumptions can materially impact the fair
value of the options and the Company's options do not have the characteristics
of traded options, the option valuation models do not necessarily provide a
reliable measure of the fair value of its options. The estimated fair value of
stock options granted during fiscal 1997 was $6.98 per share.

The pro forma disclosures amortize to expense the estimated compensation
costs for its stock options granted subsequent to July 31, 1995 over the options
vesting period. The Company's fiscal 1997 pro forma net earnings and earnings
per share are reflected below:

<TABLE>
<CAPTION>
1996 1997
---------- -----------
<S> <C> <C>
Pro forma net income........................................ $7,663,858 $11,092,254
Pro forma earnings per share:
Primary................................................... $ 0.71 $ 1.01
Fully diluted............................................. $ 0.70 $ 1.01
</TABLE>

13. RELATED PARTY TRANSACTIONS

The Company's newly acquired subsidiary leases administrative offices from
a partnership of which certain officers of the subsidiary are the general
partners. The total expense under these arrangements for the years ended July
31, 1995, 1996, and 1997 was $79,200, $112,200 and $115,200, respectively. The
future minimum lease commitments under these arrangements are $163,200 in 1998,
$163,200 in 1999, $163,200 in 2000, $67,200 in 2001, and $24,000 thereafter.

In addition, two of the Company's subsidiaries lease land, office
buildings, shop facilities, and other equipment from two of these subsidiaries'
former owners, one of which is a former Director of the Company. The total
expense under these arrangements when such individuals were considered related
parties for the fiscal year ended July 31, 1995 was $404,767. The total expenses
in fiscal 1996 and 1997 and the related future minimum lease commitments are
disclosed in Note 15.

14. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The operating subsidiaries obtain contracts from both public and private
concerns. For the years ended July 31, 1995, 1996, and 1997, approximately 44%,
44%, and 34%, respectively, of the contract revenues were from BellSouth
Telecommunications, Inc. ("BellSouth") and 15%, 21%, and 23%, respectively, of
the contract revenues were from Comcast Communications, Inc. ("Comcast").

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade accounts receivable.
BellSouth and Comcast represent a significant portion of the Company's customer
base. At July 31, 1996, the total outstanding trade receivables from BellSouth
and Comcast were $4.8 million or 22% and $6.9 million or 32%, respectively, of
the Company's outstanding trade receivables. As of July 31, 1997, the total
outstanding trade receivables from BellSouth and Comcast were $4.5 million or
13% and $11.5 million or 33% of the outstanding trade receivables.

F-19
<PAGE> 57

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries have operating leases covering office
facilities, vehicles, and equipment which have noncancelable terms in excess of
one year. During fiscal 1995, 1996, and 1997, the Company entered into numerous
operating leases for vehicles and equipment. Certain of these leases contain
renewal provisions and generally require the Company to pay insurance,
maintenance, and other operating expenses. Total expense incurred under
operating lease agreements, excluding the transactions with related parties (see
Note 13), for the years ended July 31, 1995, 1996, and 1997, was $3,358,108,
$5,018,744, and $6,561,022, respectively. The future minimum obligations under
these leases are $3,826,759 in 1998; $1,673,498 in 1999; $550,516 in 2000;
$95,870 in 2001, and $323,860 thereafter.

In September 1995, the State of New York commenced a sales and use tax
audit of CCG for the years 1989 through 1995. As a result of the audit, certain
additional taxes were paid by CCG in fiscal 1996. In addition, the State of New
York concluded that cable television service providers are subject to New York
State sales taxes for the construction of cable television distribution systems,
and by a Notice dated January 1997, the asserted amounts due from CCG for sales
taxes and interest for the periods through August 31, 1995, aggregated
approximately $1.3 million. Any sales taxes asserted against the Company may be
offset by use taxes already paid by customers of the Company. The Company
intends to vigorously contest the assertion. The Company is unable to assess the
likelihood of any particular outcome at this time or to quantify the effect a
resolution of this matter may have on the Company's consolidated financial
statements.

In the normal course of business, certain subsidiaries of the Company have
pending and unasserted claims. Although the ultimate resolution and liability of
these claims cannot be determined, management believes the final disposition of
these claims will not have a material adverse impact on the Company's
consolidated financial statements.

16. LITIGATION SETTLEMENT

During fiscal year 1995, a final settlement was reached in the complaint
filed in March 1993 by BellSouth against Star Construction, Inc. ("Star"), a
subsidiary of the Company. The settlement provided for the payment of $750,000
to BellSouth by Star. The settlement monies were paid in two installments of
$375,000 each during the quarters ended January 31, 1995 and April 30, 1995,
respectively. The Company previously recorded a liability of $1.2 million for
this claim and as such, credited operations for the excess liability at the time
the claim was settled.

17. QUARTERLY FINANCIAL DATA (UNAUDITED)

In the opinion of management, the following unaudited quarterly data for
the years ended July 31, 1996 and 1997 reflect all adjustments necessary for a
statement of operations. All such adjustments are of a normal recurring nature
other than as discussed below. The Company acquired CCG on July 29, 1997. The
acquisition was accounted for as a pooling of interests and accordingly, the
unaudited quarterly financial statements for the periods presented include the
accounts of CCG. Earnings per common and common equivalent share calculation for
each quarter is based on the weighted average shares of common stock outstanding
plus the effect of dilutive stock options. The sum of the quarters earnings per
common and common equivalent share may not necessarily be equal to the full year
earnings per common and common equivalent share amounts.

F-20
<PAGE> 58

DYCOM INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
IN WHOLE DOLLARS, EXCEPT PER SHARE AMOUNTS
-----------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1996:
Revenues:
Dycom..................................... $37,605,583 $32,648,532 $35,390,645 $39,307,689
CCG....................................... 13,248,340 12,641,609 9,824,440 14,593,403
----------- ----------- ----------- -----------
$50,853,923 $45,290,141 $45,215,085 $53,901,092
=========== =========== =========== ===========
Income Before Income Taxes:
Dycom..................................... $ 1,715,485 $ 1,603,524 $ 2,965,713 $ 2,834,998
CCG....................................... 1,003,486 179,311 (459,847) 1,538,764
----------- ----------- ----------- -----------
$ 2,718,971 $ 1,782,835 $ 2,505,866 $ 4,373,762
=========== =========== =========== ===========
Net Income:
Dycom..................................... $ 968,638 $ 984,232 $ 1,704,150 $ 2,733,124
CCG....................................... 553,486 129,311 (259,847) 850,764
----------- ----------- ----------- -----------
$ 1,522,124 $ 1,113,543 $ 1,444,303 $ 3,583,888
=========== =========== =========== ===========
Earnings per Common and Common Equivalent
Share:
Primary................................... 0.14 0.11 0.14 0.33
Fully Diluted............................. 0.14 0.11 0.14 0.33

1997:
Revenues:
Dycom..................................... $40,367,225 $40,012,074 $48,186,014 $47,639,268
CCG....................................... 16,047,187 17,263,237 14,995,292 19,413,184
----------- ----------- ----------- -----------
$56,414,412 $57,275,311 $63,181,306 $67,052,452
=========== =========== =========== ===========
Income Before Income Taxes:
Dycom..................................... $ 2,888,362 $ 2,446,288 $ 4,019,975 $ 4,434,187
CCG....................................... 1,092,878 1,129,119 680,403 2,350,306
----------- ----------- ----------- -----------
$ 3,981,240 $ 3,575,407 $ 4,700,378 $ 6,784,493
=========== =========== =========== ===========
Net Income:
Dycom..................................... $ 1,661,619 $ 1,641,478 $ 2,413,033 $ 2,552,372
CCG....................................... 574,422 672,688 405,340 1,297,856
----------- ----------- ----------- -----------
$ 2,236,041 $ 2,314,166 $ 2,818,373 $ 3,850,228
=========== =========== =========== ===========
Earnings per Common and Common Equivalent
Share:
Primary................................... $ 0.20 $ 0.21 $ 0.26 $ 0.35
Fully Diluted............................. $ 0.20 $ 0.21 $ 0.26 $ 0.35
</TABLE>

The fiscal 1996 and 1997 fourth quarter results of operations include a
$1.1 million and a $0.3 million reduction in the deferred tax asset valuation
allowance.

F-21
<PAGE> 59

======================================================

No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in or
incorporated by reference in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company of by any of the Underwriters. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the dates as of which information is given in this Prospectus. This
Prospectus does not constitute an offer or solicitaion by any one in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such solicitation.

----------------------------

TABLE OF CONTENTS

----------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 10
Price Range of Common Stock and
Dividend Policy..................... 10
Capitalization........................ 11
Summary Consolidated Financial Data... 12
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 13
Business.............................. 20
Management............................ 28
Principal and Selling Stockholders.... 30
Description of Capital Stock.......... 32
Underwriting.......................... 35
Certain Legal Matters................. 36
Experts............................... 36
Available Information................. 36
Information Incorporated by
Reference........................... 37
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

======================================================
======================================================
2,700,000 SHARES

LOGO

COMMON STOCK

----------------------------

PROSPECTUS

----------------------------
NATIONSBANC MONTGOMERY
SECURITIES, INC.

MORGAN KEEGAN &
COMPANY, INC.

THE ROBINSON-HUMPHREY COMPANY
NOVEMBER 4, 1997
======================================================